The Reserve Bank of Australia has expressed its optimistic views in sustaining a firm and stable economic growth that can increase salary wages while reducing unemployment rates. RBA’s Assistant Governor Christopher Kent said higher prices for Australia’s commodity exports are supporting the terms of trade and the mining investment slump is finally over. Kent has estimated that more than 3/4 the anticipated decline in mining investment has not passed.
“The abatement of those two substantial headwinds suggests that there is a reasonable prospect of sustaining growth in economic activity, which would support a further gradual decline in the unemployment rate,” Mr Kent said in a speech on the bank’s record of forecasting.
Australian Dollar Provides Support to Services Sector
Kent also emphasizes that there’s a good prospect that growth in wages and inflation rate will eventually lift over the period ahead. RBA’s economic forecasts were actually toppled by the actual record of the Australian economy which has grown 3.3 percent in the year to June. Inflation was weak this year though which made the central bank cut interest rates twice to a record low of 1.5 percent.
The most interesting report is that when the Australian dollar fell in 2013, it has provided vital support to the services sector, from tourism to education and business services. The RBA says the currency rate reduction is still satisfactory and mentioned that this was caused by aggressive easing policies by many other central banks around the globe.
Unemployment Rates are Reduced
The country’s unemployment rate fell in August as jobseekers dwindled in numbers and companies dropping part-time jobs Employment fell 3,900 from July; economists forecast a 15,000 gain. The jobless rate dropped to 5.6% from 5.7%; economists forecast 5.7%. Full-time jobs rose by 11,500; part-time employment fell by 15,400. Participation rate, a measure of labour force as a share of population, declined to 64.7% from 64.9%; economists predicted 64.9%.
It’s a blow to policy makers who are actually making progress in promoting hiring via record-low rates and subdued wage growth. The Central Bank has eased the policy to bolster inflation and sustaining the resilient local dollar. The Australian dollar has increased about 9% and affecting service industries that are supposed to replace mining as key growth drivers.
In its rate statement this month, the RBA said of the economy: “recent data suggest that overall growth is continuing, despite a very large decline in business investment, helped by growth in other areas of domestic demand and exports. Labour market indicators continue to be somewhat mixed, but suggest continued expansion in employment in the near term.”