"Australia's labour market continues to be surprisingly strong given the pace of wage increases, the entrenched weakness of productivity growth and the distinct lift in businesses looking to cut costs and invest in new technologies," Innes Willox, Chief Executive of the national employer association Ai Group said today.
"A key factor behind labour market strength is the disproportionately strong growth in public sector employment with businesses increasingly reporting increased competition in the labour market from the public sector.
"It seems clear that the considerations of the Reserve Bank Board at its meeting next week will be at least as finely balanced as at the last meeting, when the Bank was within a whisker of raising rates.
"The situation in Australia is quite different from that in the US where inflation is lower and interest rates higher even after yesterday's fall.
"While businesses don't hold out any hope for rates to fall over the rest of this year, they are increasingly nervous about the possibility of an increase, given weak business conditions and consumer spending," Mr Willox said.
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