Australia central bank forecasts jobless rate to stay elevated

Nathan Andrada – Fourth Estate Cooperative Contributor

Sydney, Australia (4E) – The unemployment rate in Australia’s will remain at elevated level over the next two years, while improved productivity and moderate growth in wages help the economy adjust to declining mining investment, according to Christopher Kent, an assistant governor at the Reserve Bank of Australia (RBA).

Unemployment is likely to decline by late 2015 when Australia’s GDP growth picks up to an above-trend rate, according to Mr. Kent at an event in Sydney organized by The Wall Street Journal.

Mr. Kent said it is encouraging to see recent evidence of positive employment creation, but noted that the labor market might just be catching up after a lackluster 2013.

The central bank predicts employment growth to rise gradually over the next two years, and the jobless rate to remain elevated over that period, falling from later in 2015, added the bank official.

For the past three months, unemployment stayed at 5.8 percent, after it stood at 6 percent at the start of 2014, and the economy has gained 100,000 jobs this year.

Between late 2011 and last August, the RBA slashed the overnight cash-rate target by 2.25 percentage points to a record-low 2.5 percent to help spur domestic demand and boost residential construction.

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