Sales and clerical staff worrying about their jobs
Households are observing a softer jobs market and are increasingly worried about the outlook for jobs, according to a Westpac survey that preceded the unemployment rate rising from 4.9% to 5.1% today.
The level of unemployment anxiety gives a strong signal that households are already under duress and that a rate hike based on domestic fundamentals is not called for, the Westpac economic update suggests.
The level of expectations of higher unemployment is now 34% higher than a year earlier.
Until this month it was the labourers and machinery operators who were the most worried about jobs.
However sales and clerical staff became the most worried in August.
‘It’s a very interesting shift.
“We have been hearing reports that retailers and the finance sector may be looking at reducing staff give the current soft patch in consumer demand.
“We wonder if this survey is providing us with the first clue that job shedding in these sectors may now be underway,” the report notes.
Rismark International economist Christopher Joye says with the unemployment rate rise and Westpac-Melbourne Institute inflation expectations declining, a lot of pressure will have been relieved from the RBA viz-a-vis hikes.
“The Aussie dollar has also declined by 9% at its current price of 1.015 from the high of over 1.10.
“Taking the average daily AUD/USD cross since the end of March, the Aussie dollar is down 5%.
“According to the RBA's research, this is akin to almost a full rate cut, all other things being equal.
“The yield curve will continue to invert, which means we should see lower fixed-rate home loans offered by the banks, albeit with the cost of lower term deposit rates for those net savers out there,” Joye says.
“Some fixed-rate loans are down by as much as two rate cuts, or 0.60 percentage points.
“Many will argue that official RBA rates should be going down, while the more sensible heads will probably conclude that the RBA can wait until the next inflation print in late October.
Its great news for all borrowers and the housing market especially, which is the most interest rate sensitive sector of the economy,” Joye says.
The report notes a moderation in inflationary expectations with the inflationary pulse from the food price shocks of early this year passing.
“Households are telling us they are not experiencing the same inflationary pressures as they were even just a few months ago,” it notes.
Mark Bouris, the founder of the wealth management group, Yellow Bridge Road, noted that the Reserve Bank of Australia had maintained their position on rates, citing low unemployment numbers as a key factor in keeping rates at bay or even raising them.
“But with job losses and lack of offers on the increase, low unemployment is no longer a valid argument.
“I’ve been appealing to the RBA for months and today’s figures show that the RBA needs to cut rates in September to save mortgage holders and hardworking Aussies from falling into further financial disrepair,” Bouris says.
