Businesses are finding it increasingly difficult to find suitable staff at a time when unemployment is at its lowest in almost 50 years, but the job security it brings is helping consumers cope with cost of living pressures.
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However, there is a growing feeling among economists that a sub-four per cent jobless rate could prove short-lived in the face of increasing interest rates, slowing economic growth, rising wages and as skilled migration returns.
HSBC chief economist Paul Bloxham expects the current momentum in the labour market with job vacancies and advertisements around all-time highs will see the unemployment rate at 3.6 per cent in the September quarter.
It currently sits at 3.9 per cent, its lowest since 1974.
"However, as the growth momentum fades and labour supply rises, the unemployment rate should rise as well," Mr Bloxham says.
He expects the unemployment rate could start rising in the first half of 2023 and be above four per cent by mid-year.
"The RBA may have recently adopted an 'inflation-fighting' stance. However, as soon as the jobs market turns, we expect further rate hikes to become much less likely," Mr Bloxham says.
Many economists are expecting the Reserve Bank of Australia to lift the cash rate by a further 50 basis points at its July 5 board meeting, matching the increase in June, which was the biggest move since February 2000.
Further increases are expected in coming months, taking the cash rate to at least two per cent by early 2023 compared with 0.8 per cent now.
In the interim, a survey from the Australian Bureau of Statistics found almost a third of businesses are having difficulty finding staff.
The most frequently reported reasons were a lack of applicants (79 per cent) and applicants not having the required skills (59 per cent).
"This corresponds with the strengthening jobs market and current low unemployment rate," ABS head of industry statistics Tom Joseph said.
Large- and medium-sized businesses were more likely than small businesses to have difficulties finding suitable staff.
However, a separate survey found the low unemployment rate is helping consumers cope with cost-of-living pressures.
The National Australia Bank's consumer stress index increased for the second consecutive quarter, but remains comfortably below the survey average which has been running for 10 years.
The index rose to 56.4 points in the June quarter from 55.7 points in the March quarter, but remained below the 57.8 points of a year ago and a survey average of 58.7 points.
The research showed stress related to job security eased further to a four-year low of 41.4 points.
But stress associated with cost of living jumped to 67 points, the highest since 2018.
NAB's personal banking group executive Rachel Slade acknowledged there are some individuals who may be feeling the cost-of-living pressures, but many of the bank's customers are in a "really good position right now".
"In fact 70 per cent are ahead on their mortgage payments giving them financial flexibility," she told AAP.
The ABS also found household wealth increased by a further 1.2 per cent in the March quarter, reaching a record $14.9 trillion.
Wealth per capita rose to a record $574, 807, driven by rising house prices.
"While the pace of property price growth started to moderate, with falls in Sydney and Melbourne this quarter, other capital cities and regional areas rose, resulting in an overall rise in house prices of 1.9 per cent nationally," ABS head of finance and wealth Katherine Keenan said.
Since March quarter 2020, and the beginning of the COVID-19 pandemic, household wealth has increased 35.3 per cent.
Australian Associated Press
