RBA Deputy Governor Guy Debelle welcomed the developments in the Australian labor market in a speech. He noted that “employment has grown strongly, the participation rate is close to its highest level on record and the unemployment rate has declined to be at a six-year low.” And, that is “consistent with the above-trend GDP growth in the economy.”
However, he also noted again there was “little” change in long term unemployment rate and “wages growth remains low”. Above averaged demand for labor and growth in economy should “gradually reduce the spare capacity in the labour market.” And that will lead to “gradual increase in wages growth and, in turn, inflation.” But the extend and timing are uncertain. Unemployment rate could drop further than historical experience before material increases in wages growth.
Debelle also noted that the drag on the economy from lower house prices is still unclear and RBA is paying close attention.
