Today’s tiny 0.1% fall in the unemployment rate to 6.1% can’t mask the stiff economic challenges facing the federal government as the global commodities rout worsens — with copper the latest to plunge overnight following oil, coal and iron ore.
The jobs shake-out in the resources industry, underway since 2012, has a way to go yet, and hopes that Australia’s $200 billion investment in new LNG production would pick up where the coal and iron ore miners left off have been shaken by the oil price crash. Projects are already being shelved amid write-downs and stricken share prices.
Fears for the economic outlook were underlined today with ANZ economist Warren Hogan following Westpac and tipping the RBA to cut rates by 0.5% by June this year, although other pundits point out cheaper petrol could spur growth and reduce the need for rate relief. It wasn’t long ago we were talking about possible rate rises in 2015.
Although the most recent economic growth figures surprised on the upside — coming in at an annualised rate of 2.7% to December — it was a year of two halves and, as The Australian pointed out today, Tony Abbott’s hopes of creating a million jobs in his first five years are increasingly out of reach.
Only the lower Australian dollar is a source of confidence for exporters and manufacturers. With its budget strategy in tatters — made worse by the Medicare rebate cuts abandoned today after another policy backflip — the Abbott government has already gotten off to a bad start in 2015.