The Reserve Bank yesterday left the door open for further interest rate cuts, as a plunge in newspaper job advertisements suggested that rising unemployment could become a major election issue. In particular, the beleaguered housing sector was recovering slowly, while government spending ahead of the election and lower interest rates had given the economy some extra pep. Westpac general manager of economics Bill Evans, who had predicted that the Reserve would cut rates by 0.5 percentage points, was sceptical.
International groups are also pessimistic about Australia's prospects.
The International Monetary Fund and the Organisation of Economic Cooperation and Development predicted that Australia's growth rate will be around 2 per cent this financial year - well below the Treasury's forecast last November of 4 per cent growth. The Reserve's assessment of the economy came as a monthly survey by the ANZ Bank showed the number of job advertisements in major newspapers fell for the third consecutive month to reach a four-year low. The 3.2 per cent fall, which occurred in April, followed a 7.9 per cent fall in March and a 10 per cent fall in February. But despite gloom about the economy, figures from the Bureau of Statistics showed that consumers are still spending. The bureau said retail spending rose by 1 per cent in March and was 9.2 per cent higher than a year ago, largely because of strong spending on clothing and hospitality.