Friday, January 18, 2013

Employment shrinking - it's the worst since the GFC.

See further down for details of a bogus claim by Abbott

Australia's jobs market is sliding with layoffs and unusually weak public service recruitment providing a sobering start ot the year.

New figures show employment growth of only 1 per cent in the twelve months to December, not enough to keep pace with population growth of 1.6 per cent.

The December figures pushed up the national unemployment rate from 5.3 to 5.4 per cent and sparked take of a further interest rate cut when the Reserve Bank board meets for the first time this year on February 5.

“2013 looks set to be yet another year of lacklustre jobs growth,” declared Westpac economist Justin Smirk. “On current trends unemployment will hit 5.75 per cent.”

The proportion of the population in work has slid from a peak of 62.5 per cent reached in late 2010 to just 61.5 per cent - the lowest point reached during the global financial crisis.

The Bureau of Statistics figures show Queensland acting as a drag on the rest of the nation, losing 8300 workers over the past year. In contrast NSW gained 56,400 and Victoria 36,300. Western Australia gained 59,400 workers.

Acting employment minister Kate Ellis seized on the Queensland figures saying had it not lost jobs the national unemployment rate would have fallen to 5.2 per cent.

“Since it was elected, the Newman government in Queensland has presided over 65 job losses each and every day, an increase in the unemployment rate and a decline in workforce participation as some Queenslanders have simply given up... In contrast since the federal government came to office we have created more than 800,000 jobs.”

The “break-even” point at which employment growth stops the unemployment rate from climbing is around 13,000 per month. The latest trend figures show employment growing at only half that pace, 7000 per month.

The grim news helped pushed the Australian share market to its highest point in one and a half years as growing expectations of an interest rate cut sparked buying of banking stocks. The ASX200 climbed 18 points to 4757.

Futures market pricing pushed up the implied probability of an interest rate cut next month from 37 to 41 per cent.

Opposition Leader Tony Abbott drew a link between the weak job figures are the government’s decision to abandon its promise of a budget surplus, announced on December 20.

“It is no wonder that jobs growth is weak, that unemployment is trending up, when you have got a government which simply cannot deliver when it comes to budget management. On no fewer than 200 separate occasions the prime minister and the treasurer have promised a budget surplus. It is not going to happen,” he said.

But the link is unlikely. The labour market survey took place between December 9 and 22 and asked about employment experience in the preceding week.

Separately released ABS figures show public sector vacancies have slid 30 per cent over the past year. The total number of vacant jobs in Canberra has fallen to 800, the lowest in 14 years.

In making its decision in interest rates the Reserve Bank will also take into account the latest update on inflation, due next Wednesday.

In today's Canberra Times, Sydney Morning Herald and Age

Recommended reading

. The work of Newman - Greg Jerrico

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