'Scene set for rates cut' despite steady employment figures
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The unemployment rate has remained unchanged from June to July. (ABC News: Giulio Saggin, file photo)
An economist says a bigger than expected increase in employment last month will not deter the Reserve Bank (RBA) from cutting interest rates.
There had been expectations that employment would rise by 1,300 last month, but official figures show a rise of 11,000 in seasonally adjusted terms.
The unemployment rate has remained unchanged from June to July at 4.3 per cent.
Senior economist at nabCapital, David de Garis, says the Reserve Bank knows that it will take some time for the weakening economy to lead to widespread job losses.
"The economy's slowing, and we would expect that to flow through more into the labour market as the year progresses, but it's probably a little bit early to see all of that come through just yet," Mr de Garis said.
"So it really doesn't change the picture that the scene is set for an interest rate cut and we think that it will most likely come next month."
Federal Treasurer Wayne Swan says despite today's better than expected unemployment figures, the economy could still face a gradual decline in employment.
"As we know, employment growth has been slowing, these figures are particularly welcome, but employment growth is slowing and it's slowing on the back of eight interest rate rises over three years and of course the most difficult global economic conditions in 25 years," he said.
"These figures are also welcome because I think they put into perspective some of the more pessimistic comment on the economy in recent days."
The Federal Opposition says there is encouraging resilience in the Australian job market, but it should not be taken for granted.
Acting Opposition Leader Julie Bishop says the figures show the signs of a slowing economy are becoming clearer.
