Friday, February 13, 2009
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.