Economist Paul Bloxham from HSBC suggests that Australia’s robust labour market figures for December have altered the Reserve Bank of Australia’s (RBA) outlook, increasing the likelihood of a rate hike in February. Employment figures saw an increase of 65,000, significantly surpassing the expected 27,000. The unemployment rate also fell to 4.1 per cent, with underemployment also declining. According to Bloxham, these figures indicate a tightening jobs market.
Bloxham anticipates the RBA will increase rates by 25 basis points at its meeting on February 3, marking the start of a new cycle of increases. This adjustment is based on the difficulty in arguing that the jobs market is loosening, especially with the unemployment rate falling below the RBA’s estimates of ‘full employment’.
Bloxham elaborated that a rate increase by the RBA would likely be due to the economy facing capacity constraints, resulting from weak productivity growth and a low potential growth rate, rather than exceptionally strong growth. He also noted that substantial public sector spending has been hindering the private sector’s growth. HSBC is a global banking and financial services company serving millions of customers through its four global businesses: Commercial Banking, Global Banking and Markets, Retail Banking and Wealth Management, and Global Private Banking. The company manages its operations through geographic regions.
