The problem for the RBA is wage rises at that level without productivity gains or businesses absorbing increases into profit margins will make getting inflation back to the 2 per cent to 3 per cent target band hard.
Treasurer Jim Chalmers, Finance Minister Katy Gallagher and even Burke were all at pains to avoid giving their own answer to the question. St George Bank economist Jameson Coombs says to date the growth has been “comfortably absorbed” by the labour market “without breaking a sweat”, but as interest rates weigh on the economy, that may begin to change.Adam Boyton, ANZ’s head of Australian economics, says an increase in the jobless rate did not necessarily mean the total people in work would fall.
“The outlook is much worse when removing the effect of population growth. A deep per capita recession is expected over the next two years,” Smith said this week, releasing the firm’s latest business outlook.