Friday, April 08, 2011

Get used to it. Unemployment starts with four

Western Australia: 4.2%
Victoria: 4.5%
NSW: 5.1%
South Australia: 5.4%
Queensland: 5.5%
Tasmania: 5.6%

Australia: 4.9%

An avalanche of new jobs piled on at the rate of 1200 per day has put a ‘4’ in front of Australia’s unemployment rate, returning the labour market to the golden days before the financial crisis took hold.

The March unemployment rate of 4.9 per cent is the lowest since January 2009, when cutbacks in the wake of the collapse of Lehman Brothers in the United States ended 35 straight months of rates beginning with ‘4’.

“This is a really strong result,” said jobs minister Chris Evans. “It means we are now very close to full employment. We’ve created 32,000 full-time jobs in just the past month, more than 750,000 new jobs since Labor took office.”

The news sent the dollar to a new post-float high of 104.82 US cents and saw the futures all market but eliminate the previously priced in small probability of an interest rate cut.

Victoria’s unemployment rate is now the second lowest of any state at 4.5 per cent, beaten only by Western Australia at 4.2 per cent...

The NSW unemployment rate jumped from 4.8 per cent 5.1 per cent.

Newly-elected premier Premier Barry O’Farrell said the apparent loss of 7600 jobs demonstrated ‘‘the need for the Liberal-National government to stimulate the economy’’.

‘‘Our first plank was to restore economic growth,’’ he told reporters. “I’ve said time and time again unless we have a strong economy, fixing problems across the state is going to be made harder.”

But the unemployment figures jump around from month to month and the preceding month showed a gain of 22,400. The NSW rate of 5.1 per cent is well down on the 5.5 per cent recorded mid last year.

The dive in Victoria’s unemployment rate from 5.0 to 4.5 per cent was brought about by a jump of 6500 new job propelling the rate well below 5 per cent for the first time since 2008.
ICAP economist Adam Carr said the news showed jobs growth was back on track.

"I think what we saw over the December and February period was a weather-distorted lull,” he said.

"The distortion has abated and we're back on track.”

If the jobs growth continues as this rate, Mr Carr expects the Reserve Bank to increase interest rates by June.

"A lot depends on inflation and other data but the economy is strong, the underlying momentum is strong, and the jobs data shows that,” he said.

ANZ economist Riki Polygenis said from here on the unemployment rate could dive more quickly than had been expected.

“The available workforce is growing more slowly as population growth slows. On our estimates employment needs to grow by just 12,000 per month to keep the unemployment rate steady. A year ago it would have had to grow by 25,000 jobs per month. And jobs growth is reaccelerating.”

“The danger is upward pressure on wages, particularly as the mining investment boom ramps up. The Reserve Bank says there is no evidence yet of skills shortages spreading beyond the resources sector; but slower population growth will increases the risk.”

Published in today's SMH and Age

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