RBA could hold off after job figures
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SYDNEY, Aug 9 AAP
August 09 2012, 1:27PM
A benign reading for Australian employment is not likely to get the Reserve Bank of Australia (RBA) too excited but a rate cut could still be pencilled in towards the end of the year.
Australia's unemployment fell to 5.2 per cent in July, from 5.3 per cent the previous month, the Australian Bureau of Statistics said on Thursday.
There was a rise of 14,000 in total employment in July.
The figures were close to expectations - with last week's AAP survey showing that a median of 17 economists thought unemployment would rise to 5.3 per cent but that total employment would increase by 10,000.
JP Morgan Australia chief economist Stephen Walters said jobs numbers were reasonably good, but he doesn't see an improvement in the latter half of 2012.
"You'll get some softer employment gains in the next six months or so as you see industries affected by the Aussie dollar going up and global (economic) weakness," he said.
Mr Walters said he would expect the RBA to cut the cash rate from its current level of 3.5 per cent by December.
CommSec economist Savanth Sebastian said the data was indicative of a resilient labour market but did not indicate a strong movement either way.
"I don't think the labour market's shooting the lights out, if anything it's probably going sideways," he said.
Mr Sebastian said there could increased hiring towards the end of the year.
HSBC chief economist Paul Bloxham said that continually solid numbers for employment in Australia meant the central bank would have to look outside the domestic economy for reasons to cut again.
"We still have in mind that because the global economy is slowing down, given inflation is low and the exchange rate is high, the RBA will still choose to cut rates one more time in the fourth quarter," he said.
On Tuesday, the RBA elected to leave the cash rate steady at its August board meeting.
By Caroline Smith and Jason Cadden.