Friday, December 11, 2009

Unemployment is turning down already

According the Bureau's flawed "trend"

In any event the underlying news IS really, really good

An extraordinary surge in hiring has seen 100,000 new jobs created in three months, more than half of them in Victoria, pushing Australia's unemployment rate down well below 6 per cent and raising the prospect unemployment has peaked .

Australia's new unemployment rate of 5.7 per cent contrasts with 6.5 per cent in New Zealand, 7.8 per cent in the United Kingdom, 10 per cent in the United States, and 19.3 per cent in Spain.

Importantly the "trend" measure calculated by the the Bureau of Statistics suggests unemployment has peaked and is already heading down.

"The labour market has clearly passed a turning point," said UBS Wealth Management economist Alvin Pontoh. "We've had the third successive month of double-digit increases in jobs, nearly all of them full-time. The recovery in hours worked is positive for income and consumer spending in the Christmas months ahead."

Victoria gained an extra 37,900 full-time workers between October and November, creating full-time jobs at the rate of 1200 per day; most of them completely new positions and 14,100 replacing previously part-time jobs.

Premier Brumby said the gains was ''an early Christmas present for Victorian families''.

Victoria had recorded more jobs growth than any other state for the seven month in a row.

Over the past year Victoria has created 73,200 new jobs, while the rest of the nation lost 3520.

"We have been generating jobs while other states have been losing jobs,'' Mr Brumby said. ''Victoria is the engine room of the national economy.''

Victoria's unemployment rate stands at 5.4 per cent, a rate bettered by no state other than Western Australia.

Queensland now the only state with an unemployment rate in excess of 6 per cent, at 6.1. NSW has slipped below the 6 per cent benchmark to 5.98.

The Budget forecast that had unemployment peaking at 8.5 per cent and the November update that had it peaking at 6.75 per cent appear to have been rendered obsolete.

"The monthly move in employment is always a bit of a lottery, but thankfully today’s result isn’t just a one off," said IPAC Securities economist Adam Carr. "It’s the third consecutive solid gain and consistent with other upside surprises."

"With the labour market having turned a corner I no longer think a bearish consumer outlook is credible. We have seen 100,000 jobs created over the past few months – three quarters of them full-time. Solid incomes growth, a still low cash rate and high confidence will all act to encourage growth and keep spending solid. It's consistent with what we are hearing from retailers themselves."

While Treasurer Wayne Swan welcomed the news saying it meant "more Australian families this Christmas would have a bread winner" Shadow Treasurer Joe Hockey said it was a warning to the Rudd government to "please stop spending so much money".

"It’s time to look again at the massive stimulus spending, reallocate it to places like hospitals, perhaps better aged care if you are going to spend the money, but ultimately the best thing that can be done now is to stop spending so much money, stop putting upward pressure on interest rates and start focusing on getting Australia out of its debt," he said.

The Australian dollar surged half a US cent on the news in the belief that it would embolden the Reserve Bank to bring forward likely rate rises, before losing much of the gain to close at 91.22 US.

Victoria leads the way

Since August:

Victoria:  54,700 jobs gained

11,800 jobs gained

South Australia:
11,700 jobs gained

Western Australia:
5100 jobs gained

300 jobs lost

2800 jobs lost

Seasonally adjusted, August - November ABS 6202.0

Published in today's SMH  and Age 

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