In a speech today, RBA Assistant Governor Sarah Hunter highlighted that while conditions in the Australian labor market have eased since late 2022, the market remains “tight relative to full employment.”
Looking ahead, Hunter expects labor demand to slow in comparison to labor supply, which should bring the market “into better balance” over the coming quarters. She noted that part of this adjustment is likely to come through a “decline in average hours” worked rather than sharp cuts to overall employment.
Employment growth is expected to persist but at a slower pace, lagging behind population growth. As a result, underutilization measures, including the unemployment rate, are projected to “continue rising gradually.” This rise is expected to stabilize once GDP growth returns to a level more consistent with Australia’s underlying economic trend.
Hunter’s comments underscore RBA’s outlook on the labor market, and the hawkish stance that it’s not nearing the start of rates reduction cycle yet.
