JP Morgan have raised the issue of underemployment again

Its not a new issue, been about for a while. In a nutshell:

  • Falling unemployment has been accompanied by a continued rise in underemployment
  • Says JP Morgan economist Tom Kennedy: "Although these rates have not moved in lock-step historically, discrepancies of this magnitude and duration are uncommon." (Kennedy referring to the extent of the fall in unemployment and the extent of the rise in underemployment - an all time high)

The implications for policy:

  • Household incomes suffering
  • Which impacts on consumer spending
  • And also on the inflation rate (underemployed workers willing to accept lower wages)
  • This has implications for RBA policy, increasing the potential for further cuts down the line

This might be something to watch for in the minutes, but I doubt we'll see much, if anything. But if we do it has dovish implications.

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JPMorgan expect two more rate cuts

  • In H1 of 2017

Also, Aussie employment data due this week (0030GMT Thursday 20 October 2016 ... what to expect is here)