Friday, November 07, 2008

Odd news on employment

A surprise jump in employment in October masked a hollowing out in Victoria and a rapid deterioration in NSW.

The Bureau of Statistics says an extra 34,300 Australians found work in the month, bringing the total gain in employment since June to 62,000 – more than predicted in Wednesday’s budget update.

Australia’s unemployment rate remained steady at 4.3% as it has for six of the last seven months.

Employment Minister Julia Gillard said still expected the rate to worsen to 5% as forecast in the update.

“We have been very clear with the Australian public that we anticipate an increase in unemployment. We expect unemployment to be at 5 per cent by the middle of next year and above that by the middle of the year after,” she said...

The Finance Minister Lindsay Tanner told Fairfax radio said he wasn’t prepared to trust the result.

“Look, monthly figures fluctuate. The monthly figures are very unreliable, so whether they go up or down significantly, people of both sides of politics always express great caution about emphasising monthly figures,” he said.

The figures show that 17,500 people lost their jobs in NSW in the month, one of that state’s worst results on record.

The NSW unemployment rate edged up from 4.8% to 5.2%.

Victoria retained the jobs it had, but employment increased by only 200 workers throughout the month keeping its unemployment rate steady at 4.4%.

But beneath the surface Victoria's labour force is hollowing out. More than 4,000 full-time jobs have been lost in past six months, replaced with 5,500 extra part-time jobs.

The net effect, calculated by The Age using a formula that treats two part-time jobs as equivalent to one full-time job is a mere gain of 700 full-time equivalent jobs – the worst performance of any state apart from NSW which lost 61,600.

The mining states of Queensland and Western Australia did better much than Victoria, gaining the equivalent of 40,400 jobs and 37,500. The smaller states of Tasmania and South Australia also did better, gaining 7,000 and 5,200.

Unemployment in Western Australia and Tasmania, fell to record lows of 2.2% and 3.5%.

“Looking through the data our view is that as private investment is postponed or cancelled amid an increasingly gloomy outlook jobs prospects will dim,” said JP Morgan economist Stephen Walters.

“Officials probably will not take too seriously a job report that indicates that firms rushed to employ tens of thousands of new workers as equity markets collapsed, the world's major economies plunged into recession, and governments in many countries were forced to bail out their respective banking systems.”

Westpac’s Bill Evans said employers might be reluctant to shed skilled labour during the downturn after having had such difficulty finding it during the upswing.

Mr Tanner said the economy remained “very sound”.

“The fundamentals are strong and we have got good business investment, we've got good balance sheets, we've got good banks, and still, a significant budget surplus. So it's not what's happening here that's the problem, it's just these downward pressures internationally. If they get seriously worse, then we're in uncharted territory.”

Growth in six months to October

                 Jobs*    Jobless    
Qld       +40,400        -400
WA       +37,500      -8100
Tas          +7000      -1600
SA           +5200     +4700
Vic            +700       -1500
NSW    -24,200   +17,100
Aust  +61,600     +14,200

Source: Bureau of Statistics. * Trend growth in full-time equivalent jobs. National and state trends estimated separately.