Friday, January 15, 2010

Something's working - 11 million of us and counting

A near-record year-end hiring spree pushed an extra 198,300 Australians into jobs in December - some 35,200 more than expected given the time of year. 

The surprise surge bumped Australia's unemployment rate down to 5.5 per cent, lifted the number of employed Australians above 11 million for the first time and sparked talk that Australia's unemployment rate had already peaked and was on the way down.

"We've turned the corner," said AMP economist Shane Oliver. "A continued rebound in job advertisements along with the expected rebound in the economy all point to further employment growth and a further decline in unemployment."

The May budget had unemployment peaking at more than 8 per cent and the November economic update 6.75 per cent. The latest figures suggest that instead unemployment peaked at 5.8 per cent in July and has been coming down since.

"We won't now reach 6 per cent, we have seen the worst," said Access Economics director Chris Richardson. "This is beautiful - not just a remarkable outcome... but a wonderful one. We know from previous recessions that once unemployment goes up it takes a very long time to go down. If you are out of work for two years you are more likely to get a disability pension than a job. We've escaped the worst of that."

Employment Minister and Acting Prime Minister Julia Gillard was unwilling to declare victory, sticking to the official Treasury forecast.

"The most recent forecast is that unemployment will rise to 6.75 per cent by the middle of this year. We would be delighted if the actual results were better than that but we don't want to gild the lily or try and sugar coat things," she said.

"If we look to the United States and Europe, they are struggling with unemployment rates of 10 per cent. Here in Australia we have 5.5 per cent. We are doing well, but we still have 118,000 more Australians out of work than we had a year ago."

Victoria is responsible for most of the new jobs with the Bureau of Statistics trend figures showing it accounting for an impressive 72,100 of the 110,100 new jobs added since June.

In contrast just 16,000 jobs were created in NSW, proportionately far fewer than in the smaller states of Western Australia and Queensland. Full-time jobs went backwards.

NSW shares with Queensland the nation's highest unemployment rate of 5.9 per cent. Western Australia enjoys the lowest rate, 5.1 per cent followed by Victoria and Tasmania with 5.2 per cent.

Acting Treasurer John Hatzistergos described the news as "encouraging,” highlighting the dip in the NSW rate from 6.0 per cent to 5.9 per cent.

Opposition Leader Tony Abbott said he was pleased unemployment was heading in the right direction but that it would turn back back up "if we drop the bundle on reform and if we see a continued spendathon by the Rudd Government".

"There are two big threats," he said. "The first is the unwillingness of the Rudd Government to wind back the stimulus and the threat that that poses of significantly higher interest rates. The second is the workplace relations changes."

Julia Gillard said the stimulus was already "phasing out as planned".

"We designed it to phase out. The biggest amount of stimulus dollars has already been delivered," she said.

The Australian dollar jumped almost a complete cent on the stronger than expected employment news to US 93.04 on heightened expectation of a forth consecutive interest rate hike in February.

"I honestly think that if you asked the Reserve Bank in December they would not have been expecting to push rates up in February, but we've had a lot of good news. They will be happily surprised," said Access director Chris Richardson.

11 million of us working

Extra jobs since June, unemployment rate

Victoria +72,100 5.2%
NSW +16,000 5.9%
Queensland +12,500 5.9%
Western Australia +8,000 5.1%
South Australia +2,200 5.3%
Tasmania -2,600 5.2%

Australia +110,100 5.5%

Trend job growth, seasonally-adjusted unemployment rate ABS 6202.0

Published in today's SMH  and Age 

Photo: The Interview Centre

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