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14 Aug 2015
‘Labor market has proved more resilient than expected’ – RBA’s Kent
FXStreet (Mumbai) - Speaking at an Economic Society luncheon in Brisbane on Friday, RBA Head of economics, Dr. Christopher Kent noted that a combination of falling immigration, slower wage growth and a shift towards the services sector explains why unemployment is holding reasonably steady. However, a key concern has been lower wage growth.
AUD/USD was little changed on RBA Kent’s comments and held steady near 0.7375 levels, recording a gain of 0.26% on the day.
Key Quotes:
"Although the unemployment rate has increased by much less than during the early 1990s recession, the decline in wage growth during the two episodes has been similar,"
"Furthermore, the relatively long span of the current episode means that most employment contracts have been renegotiated during the period of subpar economic growth over recent years,"
"If wage growth had not been so responsive, it is likely that employment would have been less and the unemployment rate higher than we've seen,"
"So even though low wage growth works to constrain the growth of incomes for those who are employed, it also supports incomes by encouraging more employment than otherwise."
"Over the past three years, the additional workers employed in service industries have outnumbered the extra workers employed in the goods sector by a factor of five to one (347,000 compared to only 73,000)."
“Labor, GDP data might be providing noisy signal, but hard to be sure.”
AUD/USD was little changed on RBA Kent’s comments and held steady near 0.7375 levels, recording a gain of 0.26% on the day.
Key Quotes:
"Although the unemployment rate has increased by much less than during the early 1990s recession, the decline in wage growth during the two episodes has been similar,"
"Furthermore, the relatively long span of the current episode means that most employment contracts have been renegotiated during the period of subpar economic growth over recent years,"
"If wage growth had not been so responsive, it is likely that employment would have been less and the unemployment rate higher than we've seen,"
"So even though low wage growth works to constrain the growth of incomes for those who are employed, it also supports incomes by encouraging more employment than otherwise."
"Over the past three years, the additional workers employed in service industries have outnumbered the extra workers employed in the goods sector by a factor of five to one (347,000 compared to only 73,000)."
“Labor, GDP data might be providing noisy signal, but hard to be sure.”