The Australian labour market appears to be coping surprisingly well with the end of the mining boom. However, we suspect that the recent data overstate the strength of the labour market. Moreover, if the economy slows sharply this year, as we expect, then jobs growth will follow suit. By the end of the year the unemployment rate may have risen from 6.0% in May to around 6.5%. This weakening in the labour market will be one of the factors that force the Reserve Bank of Australia to stop sitting on its hands and start cutting rates again.
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