Unemployment slides to 4pc but signs point to Federal Election 2025 being a contest on the economy

“Bear with us, the medicine seems to be working — gradually.”

If the RBA and the Federal Government are the doctors for the economy, and Australians the patients, they’re going to need to find a way to prescribe patience as well.

There are nascent signs their higher interest rates medicine is working as prescribed but the Opposition is starting to tap into the frustration many feel at continually high prices and an extended strain on personal finances.

Despite a minor tick down in the monthly unemployment rate as reported on Thursday by the Australian Bureau of Statistics — from 4.1 per cent in April to 4 per cent in May — a closer look shows some encouraging signs.

The RBA, of course, rapidly increased interest rates to 4.35 per cent in the space of 18 months to quash the highest inflation in three decades. But the bank has also been keen to preserve as much as possible of the country’s strong jobs market.

Though the monthly figures have been volatile, as Betashares chief economist David Bassanese calculated, the key details proving the loosening are in six-month averages: in the first half of 2023, it was 3.6 per cent, rising to 3.8 per cent in the second half and 3.9 per cent so far this year.

He also believes wage growth is slowing as the jobs market slows, which in turn should slow services inflation.

“The glacial easing in labour market pressures and likely further declines in inflation should allow the RBA to cut rates at least once this year, though not before November or December,” Mr Bassanese said.

Pundits appear to be disregarding the latest results from the US, where the Federal Reserve overnight dialled back expectations for interest rate cuts this year, saying it did not yet have the confidence to do so even though inflation has eased from peak levels.

Rate cuts aren’t on the cards for the RBA when it meets next week — economists at ANZ this week pushed out its forecasts for the first rate cut to February and expect just 0.75 percentage points of cuts next year.

The RBA would have five opportunities between November to mid-May to move on rates and governor Michele Bullock has maintained an election campaign would mean nothing to the board’s determinations.

But she also considers the phrase “per capita recession” means little, telling the Senate it was unhelpful as a recession entailed job losses and “human difficulty”.

The Coalition has taken up the term with gusto in an apparent sign of an election campaign contested on the economy.

Opposition Leader Peter Dutton on Wednesday said “recession” four times during a press conference.

“There are many people who are worried about our economy going into recession by the end of this calendar year,” Mr Dutton said.

“We’re up to the fifth consecutive quarter of a per capita recession in our country.”

Shadow employment minister Michaelia Cash did similar on Thursday: “You talk to households, we’re in a household recession.”

“You look at where interest rates are, you look at the unemployment figures, but more than that, you look at the decisions of (Anthony) Albanese and his Government and they are doing nothing to arrest where the economy is heading,” she said.

With an election less than a year away, voters will soon be able to determine if they want to change one of their medical practitioners. The Prime Minister and Treasurer Jim Chalmers will undoubtedly be hoping the electorate’s patience hasn’t worn thin.