Australian labour market: cracks in the veneer
It’s a lagging indicator, but cracks are beginning to appear in the Australian labour market. In our view, these cracks should widen over time as the weight of higher mortgage rates, negative consumer and business sentiment, and other cost pressures act to constrain economic activity. While the larger than normal share of households on fixed rate loans diluted the initial rate hike impacts this cycle, the result should ultimately be the same. We expect growth to slow materially over the next few quarters as the substantial cashflow hit on the heavily indebted household sector intensifies. Indeed, there is still a...