New figures on the nation's labour force will be released by the Australian Bureau of Statistics on Thursday, after the seasonally adjusted unemployment rate dropped below four per cent in November, for the first time since March.
Commonwealth Bank chief economist Stephen Halmarick said a strengthening labour market has made the Reserve Bank reluctant to cut rates, but fewer people need to lose their job before it can happen.
A strengthening labour market has made the Reserve Bank reluctant to cut interest rates. (Steven Saphore/AAP PHOTOS)
"The unemployment rate has been around four per cent for the last year or so, and the rate of inflation is decelerating, and the rate of wages growth is decelerating," he told AAP.
He forecast unemployment to come in at four per cent for December on Thursday, up slightly compared to November, but not yet approaching the 4.5 per cent the Reserve Bank is hoping for before cutting rates.
HSBC chief economist Paul Bloxham expected unemployment to eventually peak at about 4.3 per cent.
The Reserve Bank has made significant progress lowering inflation.
"But it's still got to get that last little bit ... the last mile," he said.
"The difficulty is, the economy is still operating at full capacity ... it's starting to show signs of picking up pace a bit.
"The labour market isn't necessarily loosening any more, it's levelled out," he said.
Mr Bloxham expects some rate cuts in 2025, beginning about April or May, but warned there remains a possibility interest rates will not be cut at all.
Data from recruitment firm Robert Walters on Thursday projected the potential return of a "job heavy" labour market.
More than three-quarters of businesses were actively looking to hire within 12 months in a survey with more than 4700 respondents across Australia.
Meanwhile, inflation was continuing to impact, with 73 per cent of employees saying their salaries had not kept up with rising cost-of-living.
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