Labour pains may delay rate rise

A LEADING economist pushes back his forecast for the next rate rise as the labour market slows.

RBA

A LEADING economist has pushed back his forecast for the Reserve Bank of Australia's next rate rise as labour market slows down.

HSBC chief economist Paul Bloxham said yesterday that he now expected the RBA to raise the official rate in July or August, changing his long-standing forecast of a rise as soon as May.

"The case for a May or June move has been weakened by recent labour market data showing that employment has levelled out over the past few months," Mr Bloxham said.

Mr Bloxham - a former economist at the RBA - shot to prominence last October when he defied prevailing opinion to correctly predict that the central bank's board would hold the cash rate steady that month.

In a note to investors yesterday, he said: "We continue to expect strong employment growth over the coming months . . . but suspect the recent weakness will delay the RBA's next move."

The Australian Bureau of Statistics' monthly labour force report showed last week that the economy shed 10,100 jobs in February, bucking economists' expectations for a 20,000 increase in jobs last month.

Mr Bloxham predicted the Reserve Bank would still lift rates twice this year.

"The outlook for the economy remains very strong."