Defying all expectations Australia's unemployment rate has remained unmoved at 5.8 per cent for the third consecutive month. The plateau in June, July and August has economists scrambling to wind back their forecasts of how bad things will get and leaves the government's official forecast of a unemployment peak of 8.5 per cent without support.
Access Economics, which had previously forecast a peak of 7.5 per cent, indicated yesterday it would be winding that back much further when it releases its update next month. AMP Economics had already cut its forecast of the peak to 6.3 per cent and CommSec yesterday raised the possibility that the rate might peak at just 6 per cent, way below its peak in any earlier downturn.
"We can't say for certain, but the peak certainly doesn't appear to be too far off," said CommSec economist Savanth Sebastian. "The Australian economy is growing and likely to pick up momentum, job ads are already rising and there are indications that work hours aren’t being cut to the same extent as earlier in the year."
At 5.8 per cent in August, the national unemployment rate has moved little from the 5.7 per cent recorded in March, meaning unemployment has been essentially steady for half a year...
The Budget forecast a rate of 8.5 per cent by June 2011.
The total number of hours worked has slipped 1 per cent since March as full-time jobs have been replaced with part-time ones, but encouragingly the rate at which hours are being lost is slowing with only half as many hours lost in the most recent three months as were lost in the preceding three.
Behind the good news lies a reworking of Australia's employment map with NSW and Victoria piling on jobs as every other state loses them. NSW has gained an extra 12,700 jobs since May and Victoria an extra 12,300 as Queensland, Western Australia, South Australia, Tasmania and the territories shed a combined 21,200.
The extra jobs are not reflected in the headline unemployment rates which show Victoria and NSW the worst in the country with rates of 6.3 and 6.1 per cent bolstered by an influx of Victorian job-seekers.
Prime Minister Kevin Rudd welcomed the 5.8 per cent rate, declaring that without the government's stimulus measures Australia's unemployment rate would have hit 10 per cent. "We are doing better than most of the rest of world, our stimulus measures are supporting 210,000 jobs," he told Parliament.
Opposition Treasury spokesman Joe Hockey said it was clear unemployment had as good as plateaued and might have only points more to rise. "It's now time to withdraw the stimulus and stop building debt" he said.
But the lower than expected unemployment rate will itself boost tax collections and bring down the projected budget deficit with rough estimates suggesting deficit this financial year of less than $50 billion instead of the $57.6 billion forecast in the May Budget.
The big states grow...
Extra jobs since May
-NSW + 12,700
Victoria + 12,300
...while the others shrink
Jobs lost since May
Queensland - 7,200
South Australia - 3,900
Western Australia - 6,200
Tasmania - 2,100
Norther Territory - 600
ACT - 1,200
Trend figures, ABS 6202.0
Published in today's SMH and Age