Our Senate says no
The government has been presented with evidence pointing to the success of its first fiscal stimulus package just as the Senate has rejected the latest one.
Employment held steady in January against expectations, buoyed by a surprise jump in the number of women employed full-time.
Female full-time employment jumped a seasonally-adjusted 60,000 in January, offsetting job losses among both men and part-time employed women.
"We see this as evidence of the efficacy of temporary spikes in income on activity," said Deutche Bank chief economist Tony Meer.
The government handed out stimulus cheques worth $8.7 billion in December, boosting household disposable income by more than 4 per cent over the quarter and boosting retail spending by an estimated $900 million.
"This looks like a delayed reaction," said Mr Meer. "Retailers may have been cautious to boost employment in December, but bolstered by the cash-bonus-inspired strength in sales, they have responded in January by retaining higher than usual post Christmas staff levels"...
ANZ economist Katie Dean said the stimulus package had worked to retain jobs in January in tandem with aggressive interest rate cuts. "The stimulus measures are having an impact," she said.
The jump in female full-time employment kept Australia's employment total essentially steady at 10.74 million, up 1170 workers. Financial markets had been expecting a loss of 20000 jobs.
"This was a surprise, said TD Securities senior strategist Joshua Williamson. "With every market economist expecting a large fall, the small increase was completely out of sync with other news and the evidence of many companies laying off workers since the financial crisis took a turn for the worse late last year."
Treasurer Wayne Swan welcomed the surprise news and said it added to the case for a further stimulus package to build on the first.
The Coalition's Julie Bishop said it showed the jobs market was strong enough not to need the "$42 billion spending spree" rejected by the Senate.
Although employment held steady in January Australia's unemployment rate climbed from 4.5 to 4.8 per cent, swelled by an extra 58000 job seekers.
"Households with a second working-age person not previously attached to the labour force appear to be moving in to the labour force as a way of diversifying the household income base," said Mr Williamson. "Such thinking can come from concern over security of employment of the primary wage earner and shows concern about future conditions."
The separately released Westpac Melbourne Institute survey of unemployment expectations showed a further deterioration in February to near-record pessimism.
Westpac chief economist Bill Evans said the index fell to the lowest level since 1982 "implying recessionary levels of consumer labour market pessimism".
Australia's unemployment rate is almost one full percentage point above the low of 3.9 per cent reached in February last year.
Trend growth figures compiled by The Age show that in the past year employment has climbed at just one third of its previous pace falling far short of the growth in Australia's adult population.
9 comments:
Post hoc ergo propter hoc is a fallacy.
How did a short term retail spending boost generate full-time employment? And given the confidence interval of ABS stats, I don't think you could reasonably argue that they mean anything.
Maybe instead of wasting money on handouts, the government could start funding the ABS properly such that any economic policy is crafted without working blind.
Anonymous writes:
"Given the confidence interval of ABS stats, I don't think you could reasonably argue that they mean anything."
Here's the stat I reported:
"Female full-time employment jumped a seasonally-adjusted 60,000 in January, offsetting job losses among both men and part-time employed women."
The confidence interval is detailed on page 29 of the ABS document. It indicates that:
We can be 95% confident that the true increase in female full-time employment in January was between 30,500 and 88,100.
I think it is fair to say that we can indeed be confident that the recorded jump in female full-time employment does mean something.
What does that matter? Overall employment could be anywhere between -60,000 to +60,000. Rubbish statistic. Cherrypicking because you're politically biased.
I did cherrypick. I reported the movement that had meaning, and underplayed the movement that (as you say) meant nothing.
Hi Peter,nice blog, nobody should take notice of comments like Anonymous,if you don't have the guts to post your name, in my view you are (a) a Coward and (b) your comment is worthless.
I am quite tired of reading economists who had once declared macroeconomics an area of little further interest and had no idea that this was coming, now prescribing solutions as if they are experts!
Where is the appreciation that so many of these pseudo-scientists got it absolutely wrong and that is perhaps time to go back to the drawing board. Keynes didn't work. Friedman didn't work. Why are we repeating the mistakes of the past?
Oh, because "respected economists" like the IMF said we have to. Goodo.
Excuse me while I don't excited by throwing money at every problem without anyone truly appreciating how we got there.
It would appear that Rudd and co believe the way to fix a debt bubble is to plunge headlong into another huge debt bubble. The IMF was set up primarily to assist with financial stability in emerging and third world countries, and appears to be trying to ensure its ongoing existence by turning some first world countries into third world countries.
From reviewing some of the posts on this blog, it is a shame that Mr Martin is unable to bring his critical analysis "skills" to bear on the spurious claims of the Rudd Govt, to the same extent that he does to the Opposition.
Mr Martin appears to be one of the cowardly hyenas who make up the Australian media pack, who are "brave" enough to criticise the weaker side of politics but avoid taking on the more powerful side in Government that is actually making decisions.
Budget 08: Swan squibs it
Rudd's really dud Budget promise
The Swan tax cuts that push up the effective tax rate
Swan's bank-switching package is a useless joke
Malcom Turnbull is Wayne Swan's pacemaker
Labor's home saving scheme is now only half a dud
Rudd governs blindfolded
If the first stimulus was so successful why the need for a second one?
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