Callam Pickering

The latest inflation figures suggest the RBA have little choice but to hike rates. Otherwise, they'd have zero credibility as an inflation targeting central bank.

But it is concerning, particularly because we'd enter this hiking cycle with a softer job market and mediocre economy.

Australia's unemployment rate dropped to 4.3% in October, from 4.5% a month earlier.

The underemployment rate dropped to 5.7% - one of the lowest results this century.

That left the underutilisation rate at 10%, down from 10.4% in September #ausbiz #auspol

Australian employment increased 42k in October, which left employment up 160k this year.

That's around half the 325k gain we had over the January to October period last year #ausbiz #auspol

The latest forecasts from the RBA's Statement on Monetary Policy.

Trimmed mean inflation revised higher (3.2% in Dec-25 compared to 2.6% previously).

Unemployment rate revised higher (4.4% in Dec-25 compared to 4.3% previously). This one seems too optimistic to me!

Australia's unemployment rate jumped to 4.5% in September, up from 4% at the end of last year.

And if you are wondering why it's because employment growth has slowed significantly. Up 116k from January to September this year, compared to 323k over the same period last year #ausbiz #auspol

Australia's unemployment rate jumped to 4.5% in September and now sits well above the RBA's forecast of 4.3% by year end.

The RBA would be foolish not to cut rates on Melbourne Cup day.

The unemployment rate might still be low at 4.2% but the labour market hasn't impressed this year.

Employment is up just 103k this year, compared to +282k over the same period last year.

If that doesn't pick up soon, a spike in the unemployment rate is inevitable #ausbiz #auspol

The unemployment rate might still be low at 4.2% but the labour market hasn't impressed this year.

Employment is up just 103k this year, compared to +282k over the same period last year.

If that doesn't pick up soon, a spike in the unemployment rate is inevitable #ausbiz #auspol

In 2025 so far, Australian employment growth has been disappointing.

Through July:

2025: +113k
2024: +246k
2023: +265k

#ausbiz #auspol

Australia's participation rate was 67% in July and has been hovering around that rate in recent months.

Basically, it means that Australia's workforce is more diverse than it's ever been before in terms of gender, age, ethnicity and disability #ausbiz #auspol

Australia's unemployment rate dipped to 4.2% in July (from 4.3% in June) #ausbiz #auspol

Industry wage growth ranges from 5% in the utilities sector down to 2.6% in financial & insurance services. Nationally wages rose 3.4% over the past year, with most industries >3% #ausbiz

Adjusted for inflation, Australian wages are around 5.8% below their peak.

And based on the latest RBA forecasts - released yesterday - we aren't expecting any further improvement this year or next.

Australian wages rose by 0.8% in the June quarter and are 3.4% higher than a year ago.

By comparison, consumer prices have increased by 2% over the past year.

US merchandise imports surged in the March quarter - in anticipation of higher tariffs - and have since fallen sharply.

Interestingly, US merchandise imports are pretty much in line with 2024 levels; fewer imports from China but more from other countries.

China's merchandise exports to the US have declined, but China has managed to offset that with exports elsewhere.

According to the RBA's business liaison program, the biggest impediments to productivity growth are the regulatory environment, employee skills & availability and supply chain deficiencies.

And yet the debate is dominated by tweaks to tax policy #auspol

The latest economic forecasts from the RBA:

Unemployment and inflation forecasts unchanged from 3 months ago.

GDP growth 1.7% in Dec 2025 (vs 2.1% previously) and 2.1% in Dec 2026 (vs 2.2%).

Cash rate is assumed to drop to 2.9% in the Dec quarter next year, compared to 3.6% as of today #ausbiz

They made us wait six weeks, but the RBA finally delivered another rate cut.

The timing ultimately won't impact the economy in a meaningful way, but the failure to cut last month is still one of the weirder RBA decisions I've seen.

Massive comms blunder, hurt their credibility and for what?

The volumes data accounts for price changes. So the gap between the blue and pink lines highlight the impact of prices.

Retail spending has increased 35% since the December quarter 2019.

But the volume of goods sold has been broadly unchanged in recent years, due to higher prices.

And volume per capita is almost 6% below its peak.

So we are spending more, but consuming less #ausbiz

The price of services rose by 3.3% over the past year, compared to a 1.1% rise in the price of goods.

That's a good sign that domestic price pressures have eased.

One of my favourite inflation graphs!

The RBA has achieved its inflation target over the past decade and they've achieved it by pretty consistently missing the target most years.

Undershooting in the years before the pandemic and then overshooting during the cost-of-living crisis.

But when you consider the overall economic environment, recent labour market figures, ongoing weakness in GDP and, of course, geopolitical and economic uncertainty, I think it's clear what they should do.

Trimmed mean inflation - the RBA's preferred inflation measure - has increased by 2.7% over the past year.

The result is slightly stronger than the RBA's forecasts from May, but it should dip towards 2.5% next quarter.

Is that sufficient for the RBA to cut rates? Perhaps not on its own.

In June:

Unemployment rate: 4.3% (from 4.1% in May)
Underemployment rate: 6.0% (from 5.9%)
Underutilisation rate: 10.3% (from 10%)

#ausbiz #auspol

Australia's unemployment rate jumped to 4.3% in June - reaching its highest level since November 2021 - which is perhaps a surprise given that most forward-looking measures of labour demand remain healthy #ausbiz #auspol

It feels like a decision made by an inexperienced governor and an inexperienced board. The RBA lost a tonne of economic talent during the 'reforms' and they may have been valuable when trying to navigate a complex economic environment.

Just a bizarre decision by the RBA.

They've backed themselves into a corner tying the decision so closely with the quarterly inflation figures. Particularly in an economic environment where backward-looking economic data has rightfully taken a backseat to geopolitical & economic uncertainty.