Lower unemployment complicates the likelihood of rate cuts
On Thursday, 13 November 2025, the ABS revealed that the unemployment rate had dropped from a four-year high of 4.5% in September to 4.3% in October, just below the 4.4% projection made by the Reserve Bank of Australia (RBA). This was led by the addition of 42,000 jobs, exceeding economists' forecasts of an increase of 20,000 jobs. However, Commonwealth Bank economist Harry Ottley notes, “indicators of labour demand such as the stock of job vacancies remain elevated and businesses continue [to] report that finding suitable labour is a challenge,” pointing to signs of a tight labour market. KPMG senior economist Terry Rawnsley notes that recent labour force figures “aren’t good news for mortgage holders”, with markets pricing in a steady cash rate decision following the RBA’s upcoming December 8-9 meeting. This is because a tight labour market, along with Australia’s sub-par productivity growth, raises employment costs, which firms are likely to pass on to consumers in the form of higher-priced goods and services, potentially adding to inflation. How can this analysis be applied to HSC Economics? This analysis can be utilised to assess the effectiveness of macroeconomic policies, namely Monetary and Fiscal Policy, along with analysing the trends of economic issues, specifically Unemployment.
Trump announces the removal of tariffs on beef and other agricultural exports to the US
On Friday, 14 November 2025, U.S. President Donald Trump signed an executive order to reverse tariffs on food imports like beef, coffee and bananas. This comes after the release of September US CPI data, revealing the inflationary effects of tariffs as food-at-home prices rose 2.7% in the year to September, with the price of uncooked beef products notably increasing from 12% to 18% over the same period. Don Farrell, the Minister for Trade and Tourism of Australia, welcomed “the removal of tariffs on Australia’s world-class agricultural exports, including beef”, considering that Australia exported $4.14b worth of meat to the US in 2024, making it Australia’s second largest US-bound export and accounting for 30% of beef produced by Australia according to Cattle Australia chief executive Will Evans. However, Australian beef producers are unlikely to experience a huge change in demand, at least in the short term, due to a resilient US market and weak production, with US beef production at a 70-year low following drought conditions in 2022 and 2023. Angus Gidley-Baird, senior analyst at Rabobank, reasons that “the bigger question is the longer term – if the tariffs [are reintroduced] and the US rebuilds its herd and its production.” How can this analysis be applied to HSC Economics? This analysis can be utilised to analyse the impact of global protectionist policies on Australian stakeholders (individuals, firms and government) and on economic indicators such as Australia’s Balance of Payments and Australia’s External Stability.
The Westpac-Melbourne Institute reveals that consumer confidence has turned positive for the first time since 2022
Despite the Reserve Bank of Australia (RBA) putting rates on hold at 3.60% in response to an uptick in inflation, Westpac’s head of Australian macro-forecasting, Matthew Hassan, noted that for the first time since February 2022, more Australian consumers are upbeat, rather than negative. As such, the Consumer Confidence Index jumped 12.8% to 103.8 points in November, which is the most positive result in seven years and also the second biggest monthly gain on record since 1993, outside of COVID-19 and the GFC, respectively. However, cost-of-living concerns are still dampening consumer sentiment, with the measure of family finances comparing now with a year ago in negative territory at 85.2 points. As such, AMP economist My Bui notes that “The monthly increase in sentiment has been driven by households’ future outlook”, suggesting that “strong recovery momentum” in the Consumer Confidence Index is “likely to be short-lived”, especially with the futures market regarding the prospect of a rate cut on December 9 as a mere 14%. How can this analysis be applied to HSC Economics? This analysis can be utilised to analyse the trends of economic issues like Economic Growth and Inflation, and their impact on Australian stakeholders, specifically consumers.
Economists warn against Australia’s heavy dependence on China
World-renowned economist Michael Pettis notes that China’s massive trade surplus and unproductive investments pose significant risks to Australia’s residential real estate and commodity markets. Typically, consumption accounts for 60% of GDP in most developed countries today; however, in China, consumption accounts for just 39% of GDP despite policy intervention. This trend is likely driven by China’s recent deflationary pressures, from 2023 Q2 onwards, as Chinese citizens have delayed consumption in the near-term in the hope of lower prices in the future. Mr Pettis also notes that such weak consumption partly results from its massive trade surplus, the highest historically, which is based on comparatively lower wages as Chinese unit labour costs are roughly 25-40% below that of the US. This, in turn, prevents domestic consumption from further influencing GDP. To accommodate this, China “has had to…[acquire] foreign assets” particularly Australian real estate, driving up domestic property prices and ultimately, the level of income inequality in Australia. Investment accounts for 40% of China’s GDP, with the majority of this allocation directed towards infrastructure and property, effectively making China a significant buyer of commodities. However, “China can no longer maintain these investment levels”, effectively reducing its commodity intake and hence disadvantaging Australia due to its narrow commodity-centric export base and high reliance on China for trade. How can this analysis be applied to HSC Economics? This analysis can be utilised to analyse an economy other than Australia, namely China and the impact of trends on Australian economic indicators, like its Balance of Payments, External Stability, Economic Growth, etc.