Soft labour market numbers released by the Australian Bureau of Statistics (ABS) will put more pressure on the Reserve Bank to cut the cash rate.
That's the view of NAB economist Alexandra Knight, who told Real Estate Business that the slight downturn in job numbers is helping to build the case for more interest rate cuts.
According to ABS data, Australia shed 27,000 jobs in June, pushing the unemployment rate up by 0.1 per cent to 5.1 per cent.
“In itself, it’s not enough to make the RBA move, but we are expecting a rate cut in September, and this just adds to the case for the lowering of the cash rate.”
But Ms Knight said an overall flat employment market was not the Reserve Bank's focus.
“We still saw 30,000 jobs created in the previous month, so if you average them out we see that the outcome gives us no employment growth or decline overall,” she said.
“We’re more looking towards the June quarter CPI results out later this month, so if that comes in soft that might help them build confidence to cut.
“We’re forecasting a 25 basis point cut in September."
“The RBA is comfortable with the rate as is ... and we believe they are taking a wait and see for more softness in the economy approach."