Don’t get too excited, yet.
Officially employment surged in January after going sideways (falling slightly) throughout 2011.
The jump of 46,300 jobs in January sounds good, but is doing little more than reversing a slide of 35,700 jobs in December (revised down from a slide of 29,300).
The truth is jobs growth is a lot less spectacular than it now looks and a bit better than it did look.
Using smoothed trend figures and going back to the start of the financial year the Bureau of Statistics believed 11,900 jobs were created in seven months, not enough to stop the number of people identifying as unemployed climbing 19,000.
The more important point is that these are small numbers in the context of the total number of Australians in work - 11.4 million.
Employment is continuing to go sideways. The mid-year budget update foresaw that total growing 1 per cent, around 114,300 jobs. Seven months into the financial year we have scarcely scratched the surface.
The Bureau says the trend rate of jobs growth right now is 1700 jobs per month. At that rate it would take five years to accumulate extra the jobs forecast for this financial year. The unemployment rate would steadily rise from 5.1 per cent to the upper fives.
Maybe jobs growth will take off. But we can’t be sure that it has taken off yet.
The Reserve Bank is as unlikely to be persuaded that the labour market spluttered into life in January as it was that jobs growth really stopped in 2011.
A good figure is better than a bad one, but it is unlikely to dissuade the Reserve Bank from cutting rates next month if that’s what it is minded to do in order to offset private bank rate increases.
In Thursday's BusinessDay
Official figures showed a boost in employment of 46,300 in January pushing down Australia’s unemployment rate from 5.2 to 5.1 per cent.
But the jump largely reversed a seasonally adjusted dive of 35,700 jobs in December.
On a trend basis employment inched ahead just 1700 in the past month, well short of the 5600 per month that would be needed to meet the forecasts in the government’s mid-year budget update.
Employment minister Bill Shorten said he expected upward pressure on unemployment in future months.
But he said the January figures showed employment at a record high and unemployment much lower than in many parts of the world, something that “might even give a 24-hour siesta to the opposition’s negativity”.
Treasury executive director David Gruen told a Senate committee the labour market was “clearly weaker in 2011 than it was it was in 2010”. He expected an improvement this financial year, but jobs growth would still not be fast enough to keep pace with population growth.
NSW gained 10,900 jobs in seasonally adjusted terms in January but continued to lose jobs in trend terms.
The NSW unemployment rate was close to the national average at 5.2 per cent. Tasmania had the highest unemployment rate at 7 per cent, Western Australia the lowest of any state at 4.2 per cent, and the Australian Capital Territory the lowest in the nation at 3.7 per cent.
In today's Canberra times and Sydney Morning Herald
For another view, one that takes one month's seasonally adjusted change literally, here's Prime Minister Gillard in parliament yesterday:
"Today we see statistics that I believe that Australians will take pride in when they look around the world and see how many nations and how many working people—millions of them—are suffering with unemployment. Let me repeat: today the unemployment rate went down; 46,000 jobs were added to the economy in January. This is at a time when the number of people who were looking for work—the participation rate—went up. This means we saw over 15,000 people who were looking for work find a job. That is a remarkable thing. Just think about it: over 15,000 Australians who were without the benefits of work have found a job."
And Wayne Swan, Sunday:
"On Thursday, we learnt that more Australians are in work today than at any time in our history. That’s more Australians than ever bringing home a pay packet to their families, gaining the opportunity of a better life and a brighter future. It’s a fantastic achievement for our nation, particularly given the current state of the global economy. This news was unfortunately overshadowed in the media by reports of job losses at a number of companies. Obviously any job loss is a huge blow for those affected, but it’s important not to lose sight of the bigger picture – the fact that overall 46,300 more Australians gained work last month and the unemployment rate fell to 5.1 per cent."
And Prime Minister Gillard Sunday:
When I've got the unemployment results on Thursday and saw our economy create 46,000 jobs in January, that's the kind of thing I'm focussed on.
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