Friday, September 09, 2011

Employment growth stops. Pity about the promised 500,000 new jobs

It may be a sampling error. If not...

Turning down

So far this financial year

Work-ready population: up 26,500
Total jobs: down 13,800

Jobs for men: down 15,500
Jobs for women: up 1700

Full-time jobs: down 39,000
Part-time jobs: up 25,100

ABS 6202.0 June - August, seasonally adjusted

Employment has stopped growing, rendering improbable the budget forecast of 500,000 new jobs and pushing up the unemployment rate as the number of work-ready Australians grows.

Since the start of the financial year the number of Australians with jobs has shrunk 13,800. Around 10,000 jobs were lost in August. By contrast the budget forecasts had employment growing by around 20,000 per month, swelling to 500,000 new jobs after two years.

The budget had the unemployment rate falling from 5 per cent in June to 4.75 per cent by June 2012. Instead in the first two months of the financial year the rate has climbed to 5.3 per cent.

Westpac is now forecasting an unemployment rate of 5.75 per cent by mid next year - a completely percentage point higher than the May budget forecast.

The Bureau of Statistics figures show in the past six months employment growth has limped along at an annualised pace of less than half a per cent, well below the rate of population growth. The budget had forecast 1.7 per cent per year for two years.

Without jobs growth at the rate forecast the budget’s revenue forecast and projected return to surplus are in doubt.

Men have borne the brunt of the downturn, losing 15,500 jobs in two months in which female employment held firm, climbing 1700...

The female result would have been bouyed by the creation of 30,000 temporary jobs in July and August to work on the census. Although many were taken by people who already had would, previous ABS estimates suggest about 5000 would have gone to people out of work. Those jobs will vanish in September.

Around 39,000 full-time jobs disappeared in July and August, replaced by 25,100 part-time jobs.

Employment minister Chris Evans described the downturn as “a slight weakening.” Separately indigenous employment minister Mark Arbib reaffirmed the Treasury forecast of 500,000 new jobs over two years.

Basking in the good but dated economic growth figures for the three months to June released Wednesday Treasurer Wayne Swan attacked the media and the opposition for focusing on negatives, saying “the glass is more than half full, it is not half empty”.

Queensland and NSW continue to have the worst unemployment rates in Australia of 6.2 and 5.4 per cent. Victoria and South Australia enjoy rates of 5.1 per cent and Western Australia 4.4 per cent.
Credit Suisse consultant Sean Keane said 2011 was shaping up to be the worst year for jobs growth since 1992. “We have created just 23,000 new jobs this year,” he wrote to clients. “That trend will leave the labour market with its worst annual result in 20 years.

“It’s a reality check for those people who thought the growth figures meant the economy was shooting the light out,” said CommSec economist Savanth Sebastian. “Businesses are cautious and more circumspect about future hiring.”

HSBC economist Paul Bloxham said firms may have been “overzealous” in taking on workers late last year.

“After the chronic labour shortages just prior to the financial crisis many firms were probably overly keen to hire workers when they saw the next investment boom coming and so we had labour hoarding. This seems to be being unwound.”

A reanalysis of the raw employment survey data by RBS Australia economist Kieran Davies suggests the downturn may not be as severe as the published figures indicate.

He said examining changes in the status only of people already in the monthly survey, employment seemed to have advanced 29,000.

Published in today's SMH and Age

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