SYDNEY, June 16: Australia’s May jobs data showed an economy in fairly good health, but external risks to growth were not lost on policy makers – a point highlighted by central bank assistant governor Christopher Kent.Reserve Bank of Australia’s RBA Kent said challenges facing China – Australia’s largest trading partner – pose risks as the world’s second-largest economy rebalances from one reliant on investment to consumption.Speaking on “The Economic Transition in China” at a business lunch in Brisbane, Kent said China’s economic growth is likely to experience a “gradual moderation” over the next few years, though there are a number of risks to be mindful of.”There appear to be increasing tensions between the goals of shoring up short-term growth and pursuing institutional reforms that would help to sustain growth over the longer term and assist with the rebalancing of demand from investment to consumption,” he said.Yet, Kent was quick to add that the Chinese authorities “will no doubt respond if the economy experiences shocks that might otherwise lead to a so called ‘hard landing’ for the economy as a whole.”The assistant governor stayed away from commenting directly on Australia’s monetary policy setting, but his views on China were a sobering reminder of the external risks facing the domestic economy even though jobs data showed resilience in the labour market.Thursday’s report from the Australian Bureau of Statistics showed Australia’s unemployment rate held steady at a three-year low of 5.7 percent in May for a third month running – offering no trigger for resuming easing next month.The RBA left the cash rate unchanged at a record low 1.75 percent earlier this month as widely expected, following a surprise cut in May on persistently low inflation.A total of 17,900 net new jobs were created, slightly above the median forecast of 15,000, though all of them were in part-time employment, highlighting a soft underbelly in the report.”The structural changes in the labour force over the past few years mean the new jobs are mainly in the services sectors like health, retail, tourism and education. About 60 percent of them are part-time or casual,” said Michael Workman, senior economist at Commonwealth Bank.The local dollar dipped back below 74 U.S. cents on the data, although it was down a mere 0.3 percent on the day at $0.7390.”The next major inflation reading on 27 July is expected, in our view, to provide the RBA with sufficient evidence to justify another rate cut in August,” Workman said. (AGENCIES)
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