Friday, July 09, 2010

At least the jobs are alright

5.1% and headed down

Prime Minister Gillard is set to face the election with an unemployment rate of just 5 per cent after expectations of a mining boom created one of the biggest job surges on record pushing the unemployment rate down to 5.1 per cent, close to what the Treasury defines as "full employment".

An extra 45,900 jobs were created in June - more than 1500 each day - a rate topped only once before in the past four years.

Some 40,000 of the new jobs were created in the mining states of Western Australia and Queensland. Australia's biggest state, NSW created just 15,000 new jobs. Employment in Victoria went backwards.

The June survey was conducted before the resolution of the mining tax dispute at a time when the industry said it was scaling back. It shows the two mining states between them created almost 100,000 new jobs in the first half of this year, far more than the two largest states which between them make up more than half Australia's population.

"We're creating 'haves' and 'have-nots' - this will add to debate about a two-speed economy," said CommSec economist Craig James. "In Tasmania the jobless rate is 6.5 per cent but it's below 3 per cent in both territories and its 4 per cent in Western Australia."
In Brisbane Treasurer Wayne Swan described the figures as "stunning," parrying questions about an imminent election by paying tribute to the Australians who had "got behind stimulus to keep the economy strong"...

The news boosted the Australian dollar an immediate half a US cent and contributed to an exceptional gain of 2.5 cents over the day which lifted the dollar to 87.40 US.

Westpac currency strategist Jonathan Cavenagh said there had been a "big swing around on the interest rate market" with expectations of cuts priced out and expectations of hikes dramatically extended.
In evidence before a Senate committee last month Treasury official David Gruen said it had been "a longstanding practice" to regard full employment as around 5 per cent, meaning that if the rate falls lower "inflation starts to rise and you end up in a situation which is inconsistent with the Reserve Bank’s mandate, and so they act."

The Bank indicated this week that a rate hike at its August meeting was a "live" possibility should inflation remain stubbornly high. "Whatever the Reserve Bank thought beforehand, there is no doubt these figures will make a move more likely," said ICAP Securities economist Adam Carr.

The figures show jobs growth accelerating from a seasonally adjusted 80,000 of the year to 104,000 in the second.

"It's as good a sign as any that, far from slowing under weight of rate rises, the economy is actually getting stronger," said Mr Carr. "Adding to that is the fact that of the 184,000 jobs created so far this year, 153,000 have been full-time.

The figures also show the trend in total hours worked climbing and the so-called under employment rate sliding from 7.5 to 7.0 per cent.

Ahead of the figures the Paris-based Organisation for Economic Co-operation and Development questioned whether Australia's jobs record was as good as it looked saying that taking into account underemployment the "overall slack" in the Australian labour market was worse than the OECD average.

Where are the new jobs?

Since December, June unemployment rate

Queensland 54,300 5.3%
Western Australia 42,600 4.0%
NSW 41,800 5.2%
Victoria 39,600 5.4%
South Australia 11,600 5.4%
Tasmania 4900 6.5%

ABS 6202.0, Six months to June, Seasonally adjusted

Published in today's SMH and Age

Australia Employment Note

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