Unemployment is on the way up, write Crikey writers Glenn Dyer and Bernard Keane, but the good news for the new PM is his election has triggered a miracle sharemarket surge the world over.
The number of people unemployed in Australia last month hit a 15-year high in August, according to the latest data from the Australian Bureau of Statistics, as the slowing resources investment boom and weak domestic demand in sectors such as retailing and the media take a toll on employment.
The deterioration of the Australian labour market deepened in August with a second month of job losses and a rise in the unemployment rate to 5.8% (seasonally adjusted), the highest since August 2009. On a trend basis, the unemployment rate was steady at 5.8%, which tells us that the health of the jobs market continues to slowly worsen. A total of 10,800 jobs were lost in August, similar to the 10,200 reported as lost in July; full-time employment was down 2600 people to 8.128 million, and part-time down 8,200 to 3.508 million. The number of people unemployed increased by 9,400 people to 714,100 in August, the highest since November 1998.
With unemployment a lagging indicator (in that it tells the story well after the event has happened, such as job losses), there’s more unemployment on the way, with the jobless rate forecast to peak at 6.25%.
This in turn will mean higher welfare payments and lower personal income tax revenues into 2014-15, which will increase pressure on the budget. The saving grace for the economy is that policymakers such as the Reserve Bank and federal Treasury see this as temporary, and are forecasting the economy to grow faster in 2014.
But it is a dose of reality for the incoming government that its first policy challenge won’t be to cut spending, but try to control a possible budget deficit expansion to accommodate the higher benefits and lower tax collections. And the Reserve Bank is unlikely to intervene with another rate cut to provide additional stimulus — at least not this year.
On the positive side, the ABS monthly seasonally adjusted aggregate hours worked series showed an increase in August, up 1.1 million hours to 1650 million hours, which indicates employers are still keeping people working rather than sacking them or pushing them into part-time work.
And to cap off the story of one of Labor’s few significant policy failures, the ABS reported a seasonally adjusted labour force participation rate decrease of 0.1 percentage points to 65% last month. That’s the lowest the rate has been since 2007.
The seasonally adjusted underemployment rate was 7.8% last month, and the ABS said that “combined with the unemployment rate of 5.8 per cent, the latest seasonally adjusted estimate of total labour force underutilisation was 13.7 per cent in August.”
There were few standouts in the state numbers. The main contribution to the higher national unemployment level was NSW, where unemployment rose 0.2 points to 5.9%, the highest since late 2009, although participation edged up there as well, always a good sign. Victoria was flat on 5.7%; Queensland moved from 5.9% to 6%, though there was a big fall in participation. South Australian unemployment fell 7.1% to 6.8%, helped by a fall in participation; the volatile WA numbers jumped from 4.6% to 5%, but with higher participation. Tasmania barely shifted, from 8.2% to 8.3%.
And while we’re on economic data, it’s rare to see the Murdoch outlets missing a trick in spruiking Tony Abbott, but it’s our sad duty to report today that Phil Jacob, the Daily Telegraph’s business editor, completely missed an opportunity to laud our new Prime Minister. “Abbott win delivers $25 billion market dividend” was the headline on the front page of the Daily Telegraph today, referring to the rise in the local sharemarket since Monday.
Now, since May last year, the Gillard government oversaw a 25% rise in the sharemarket, despite introducing a supposedly catastrophic carbon price on July 1. That’s a market dividend in the hundreds of billions. (That included the best financial year in the last five for the market, which was up 17.4% and the best year for super funds as well with growth of more than 15%.) But never mind that. What Phil Jacob missed was that the Dow Jones has also surged since Monday — it’s up 1.7% compared to the ASX200’s 1%. And the Shanghai Composite index is up 1.3%! And the Nikkei is up 1.5%.
So OK, you might think that the ASX200 is merely following world markets upward, as China recovers, rather than reacting to an Abbot victory. But we have a better theory: the election of Tony Abbott has caused a surge of confidence right around the globe — from Wall Street to the Tokyo bourse to China, investors are celebrating an Abbott win and the confidence it will engender in global capitalism!
What’s disappointing is that Murdoch’s hacks have missed an opportunity to point this miracle out. They’re getting slack at Holt St.