Not surprisingly, the move to an above trend growth rate for the economy over the past half year or so is now generating a decent rate of employment growth. What’s more, it now appears that the unemployment rate has peaked and that by this time next year, the unemployment rate will likely be around 5.5 per cent, perhaps a little less.
Over the three months of the March quarter, employment has increased by 88,000, to register the largest quarterly increase since the March quarter 2012.
There’s not a lot more to say, especially with the ANZ job ads series trending up for the past five months, the leading indicators for growth still buoyant and the global economy with enough upside momentum to see commodity prices, as measured by the CRB index, at a two year high.
The sensible monetary debate is now focusing on the need for interest rate rises. Exactly when to start delivering them and having a broad strategy for how many hikes will be needed over the medium term is the basis for the discussion.
Quite obviously, the RBA should be hiking in May. The inflation risks are building, growth is powerfully strong, housing is booming and as noted above, global conditions continue to provide a positive backdrop to the export sector which is raking in money hand over fist.
Even blind Freddie can see that a 2.5 per cent cash rate is not appropriate.