Reserve Bank governor Glenn Stevens has presented a cautiously optimistic outlook on the Australian economy, indicating that unemployment may have bottomed.
“Outside the mining sector and parts of the economy most directly exposed to it, there are signs that conditions have been very gradually improving,” Mr Stevens told the parliamentary economics committee.
“The rate of unemployment, though variable from month to month, seems to have stopped rising, and it is at a level a bit lower than we had thought, six months ago, it might reach.”
However, the governor acknowledged that economic growth was concentrated in New South Wales and Victoria.
“Of course, the performance is not uniform geographically or by industry,” he said.
“The two large south-eastern states show the largest increases in demand and employment, and dwelling prices, while conditions elsewhere are more subdued.”
Mr Stevens warned that upcoming interest rate rises in the United States could have far-reaching effects, but acknowledged that it would sooner or later have to happen.
While saying that there was a degree of “irreducible uncertainty” over the timing of US interest rate rises, he suggested that global interest rates would remain “quite low for some time yet”.
“Some fretting about the first increase in US interest rates for nine years is to be expected, no matter how well telegraphed it has been,” he told the parliamentary committee.
“The more important factor, though, will be the pace of subsequent increases.”