Australia / Spotlight Reports
August 2019 Economic Update: Unemployment Remains Steady
by Liam Harrison
Aug 27 2019

Last week, according to the Australian Bureau of Statistics, unemployment remained stable in seasonally adjusted terms at 5.2% in the month of July, with 41,100 persons becoming employed over the month. Global risks in the economy, such as the US-China trade war, Brexit and economic slowdowns in the Eurozone have reduced company’s willingness to invest, limiting employment growth. Increased cost of living pressures has also driven more Australian’s to seek jobs over the month, increasing the total labour force participation rate.

To stimulate economic growth and place downward pressure on the unemployment rate, the Reserve Bank of Australia (RBA) is expected to further cut the cash rate below its historic 1.0% over the next six to twelve months if unemployment remains stagnant or increases. The RBA has traditionally sought a target unemployment rate of 5.0% within the economy to consider labour at full capacity. However, this target has since been revised, and an unemployment rate of 4.5% or lower is now being considered the target unemployment rate for full capacity. As GDP has slowed, the RBA has called on the Federal Government to increase expenditure on infrastructure projects and fast-track already approved projects to stimulate the economy and avoid a prolonged economic slowdown.