Friday, July 11, 2008

Has our jobs market peaked?

Australia’s jobs market is on the edge of turning down after nearly two years of continuous growth.

Labour force figures released yesterday show that employment in the ACT, NSW and Tasmania has already turned down and the national rate of job creation has collapsed.

Until March this year jobs were begin created Australia-wide at the rate of 17,000 per month. Since April that rate has fallen to 800 per month.

The ACT has lost an average of 1,000 jobs in each month.

Lehman Brothers economist Stephen Roberts said the jobs market was on the edge of deteriorating and that an apparent upturn in June was “mostly statistical noise”.

The seasonally adjusted figures showed that 29,800 jobs were created in June after 25,600 jobs were lost in May.

The unemployment rate was little-changed at 4.2 per cent.

The Employment Minister Julia Gillard said the news was welcome “in the context of eight interest rate rises over about three years, skyrocketing international oil prices and global financial turmoil"...

The Treasurer Wayne Swan said that “given the global credit crunch and given the global oil shock the figures are very welcome indeed”.

“The economy has been slowing. So given that, these are very encouraging figures. I for one am optimistic about the future of the Australian economy,” the Treasurer said.

Opposition employment spokesman Julie Bishop described the jobs market as “steady” but said that she was worried about the year ahead.

Westpac’s Anthony Thompson said looking through the monthly volatility jobs growth was continuing to slow.

However he expected businesses to be reluctant to cut staff amidst as the economy slowed after finding it so difficult to secure staff during the tightest labour
market in more than 30 years.

He expected the unemployment rate to climb gradually to 4.5 or 4.7 per cent by the end of the year.

The ACT’s unemployment rate remains the lowest in the country at 2.3 per cent. Every other state or territory has an unemployment rate above 3 per cent, and NSW, Victoria and South Australia have rates above 4 per cent.

Only 4,507 ACT residents were unemployed in June. In May the Bureau of Statistics reported that 5,600 ACT jobs were vacant.

In s preliminary assessment of the Australian economy released yesterday the International Monetary Fund said it “shared the authorities view that economic activity is beginning to slow”.

However it said in its view the balance of risks was “tilted toward the upside”.

Much higher commodity prices, big immigration flows, and increased infrastructure spending should provide a boost to economic activity.

“On the downside, a global slump could weaken export demand, and further international financial turmoil could tighten credit conditions and increase banks' funding costs. In addition, farm output may not rebound from the drought as expected.”

The Fund described Australia’s outlook as “more uncertain than usual”.

It said it was essential for the Reserve Bank to “maintain a tight policy stance until it is clear that inflation will abate”.

In addition more spending restraint might be required. The Fund encouraged the Australian government to “identify areas in which additional spending cuts could be implemented.”

This year’s IMF preliminary assessment of the Australian economy is the first to be publicly released.

The Treasurer Wayne Swan said he had authorised its release in accordance with Australia’s support for enhanced transparency of the IMF process.

The assessment represents the initial thoughts of Fund officials after visiting Australia to speak to the Commonwealth Treasury, the Reserve Bank and private sector organisations.

The Fund’s final report will be released later in the year.