No competent economist would suggest the labour market is strong or indeed that there are any concrete signs that conditions will improve in the months ahead. The unemployment rate has been 6.0 per cent or higher for 15 straight months, something that Australia has not experienced for 12 years. Job creation is not keeping uo with popultion growth and job advertisements are flat at a relatively low level.
The policy risks are not clear from this mix. There may be grounds for lower interest rates and perhaps fiscal measures if the poor news dominates in themonths ahead. That said, the RBA is giving a huge weight to the current very low level of the Australian dollar as a factor that will stimulate the economy through exports and import replacement. That, with record low interest rates and decent global growth, should be underpinning better economic news. They are not which us why the market is pricing in more rate cuts and economists are climbing over each other to have the most bearish forecast for the unemployment rate.
For me, the RBA is on hold for a long time to come. We'll see.