Thursday’s surge in Australia’s July unemployment rate to 6.4% was seen by many as overstating the weakness in the labour market.
But Betashare chief economist David Bassanese says, “history suggests such large gains are usually sustained”.
“Australia may now need to get used to 6% plus unemployment rates for some time yet,” Bassanese said in a note overnight.
Bassanese said the problem with this is it “poses a clear risk to hopes that consumer spending will underpin the economy during the transition period from mining to non-mining investment”.
No wonder the Aussie dollar fell and interest rate traders are betting more heavily in favour of an RBA rate cut.
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