Jobs to go, despite signs of hope: Rudd

(AAP) - More Australians are likely to lose their jobs even as the economy shows signs of recovery, Kevin Rudd says.

The prime minister recited a well-worn phrase as a major economic forecaster said
unemployment may not be as bad as feared.
"There are some positive signs in the global economy, we're not out of the woods yet
and unemployment will continue to rise," Mr Rudd told reporters on Tuesday.
Access Economics says unemployment may peak at 7.5 per cent, a level much lower than
Treasury forecasts of the jobless rate hitting 8.5 per cent in the next financial
year.
Treasurer Wayne Swan, however, has stuck by the official forecasts made in the May
budget, saying no revisions would be made before the Mid-Year Economic and Fiscal
Outlook is released later this year.
"It doesn't show that we're out of the downturn, it shows that the worst of the
global economy may be behind us but that we will live with the consequences of the
global recession for some time to come," Mr Swan said.
Shadow Treasurer Joe Hockey said massive government spending would push up interest
rates.
"Please prime minister, start pulling back on the borrowed spending, because it is
going to slow down Australia's future growth," he told reporters in Sydney.
Coalition employment spokesman Michael Keenan said unemployment may not be as high
as the government expects.
"Eight point five (per cent) might be a bit pessimistic based on what we know at the
moment," Mr Keenan told AAP.
The Reserve Bank of Australia (RBA) also believes unemployment may be contained.
"Labour market indicators were likely to remain soft for some time, though there
were signs that employers were making efforts to minimise job shedding," the minutes
of the central bank's July meeting released on Tuesday said.
But the good news for home buyers is the RBA is still open to the idea of cutting
interest rates, now at a 49-year low of three per cent.
"Members noted that the current inflation outlook afforded scope for some further
easing of monetary policy, if that were needed to give further support for demand at
a later stage," it said.
In another sign of economic recovery, motor vehicle sales rose in June for the third
consecutive month, Australian Bureau of Statistics figures showed.
The 5.7 per cent increase last month also was the steepest monthly rise in
four-and-a-half years.
It coincided with the small business investment allowance rebate being raised to 50
per cent, from 30 per cent, for items costing more than $1,000.
"I welcome the effectiveness of the small business tax break in sustaining car sales
during these challenging economic times," Small Business Minister Craig Emerson said
about the allowance for firms with a turnover of less than $2 million.
With any economic recovery comes the threat of higher interest rates.
While inflation is showing some signs of moderation, the experts still expect some
price pressure measures to print on the high side when official consumer price index
data is released on Wednesday.
Mr Swan has ruled out bringing in a third stimulus package, as advocated by the
union movement, but he committed to keeping existing programs in place just in case
the economic recovery takes a while to materialise.
"To withdraw that stimulus would be utterly irresponsible and be a recipe for higher
unemployment," he said.