Australian Prime Minister predicts unemployment will drop below 4% in 2022

Australia’s Prime Minister Scott Morrison said he expects unemployment to fall below 4% this year.

The unemployment rate dropped to 4.2% in December last year, the lowest ever in 13 years.

“I believe we can achieve the unemployment rate ahead of the’3’this year,” the Prime Minister told Canberra’s National Press Club on February 1. 2022. I haven’t seen this in Australia for nearly half a century. “

Philip Lowe, the governor of the Reserve Bank of Australia (RBA), shares the same view with Morrison and expects the unemployment rate to be around 3.75 percent by the end of 2023.

Nonetheless, Mr Rowe said he was calm about the prospect of raising cash rates, despite rising inflationary pressures and lower unemployment.

At its first board meeting in 2022, the central bank confirmed that cash rates would remain at record lows of 0.1%, as economists and financial markets expected.

“The Board will maintain highly supportive financial conditions to achieve the goal of returning to full employment and inflation in line with the goal,” Rowe said in a statement on February 1. I promise. “

Financial markets, which reflect the risk of rising interest rates in commodity prices by mid-year, expected the RBA Governor to provide a more specific outlook for cash rates.

“The lack of clarity in the forward guidance of this statement leaves ample opportunity for Governor Rowe to close the gap,” said Phil O’Donohue, chief economist at Deutsche Bank in Australia.

But he said there was nothing in Rowe’s statement that discouraged him from expecting a rise in cash rates in August. By that time, the RBA will receive two more quarterly inflation reports.

Office employee reserve bank
On September 4, 2018, office employees walk in front of the Reserve Bank of Australia in Sydney. (Saeed Khan / AFP / Getty Images)

Meanwhile, retail spending saw a sharp decline of 4.4% in December last year after experiencing very strong results for several months as the economy recovered from the blockade of COVID-19 in late 2021.

According to the Australian Bureau of Statistics, monthly sales reached $ 31.9 billion ($ 22.7 billion) in December last year, the second highest level after the record $ 33.4 billion ($ 23.8 billion) in November. did.

Nonetheless, Paul Zahra, CEO of the Australian Retailers Association, said the January and February retail outlook was not bright due to the Omicron variant.

“Foot traffic has slowed significantly, and continued staff shortages, supply chain delays, and rising prices have created another dire trading condition for retailers this year,” Zahra said.

However, consumer confidence, an economic indicator that measures future household spending trends, shows that the impact of the decline in the Omicron case seems to outweigh the pressure of rising inflation, and there is a risk that interest rates will officially rise. Because of this, this year’s rates have improved further in the week starting January 24th.

The ANZ-Roy Morgan consumer confidence index rose 1.7% to 101.8 in the week starting January 24, recovering from a plunge to 97.9 in mid-January, when the country was at the peak of the Omicron wave.

Meanwhile, the manufacturing industry has been further affected by supply chain disruptions and summer labor shortages, hindering industry improvements after the end of last year’s blockade of COVID-19.

Ines Willox, CEO of the Australian Industrial Group (Ai Group), said that while selling prices only cover some of these costs, rising input prices put pressure on the sector. He said he was feeling.

The Manufacturing Index showed a gradual contraction as the Ai Group’s Manufacturing Index performance fell 6.4 points in December and January to 48.4.

Alfred buoy