Rethinking the job numbers. As large as the June jobs rise of more than 29,000 seemed, it disguised the real state of the jobs market, which is sluggish, like much of the domestic economy. But unlike retailing, housing and other businesses, employment remains firm with the growth slowly disappearing. If we look at the jobs figures for both May and June, only a net 4,300 or so were created. The Australian Bureau of Statistics reported that 29,800 jobs were created in June and that the loss in May had been revised from 19,700 to 25,600. That’s a substantial revision and the betting is that the June figure will be trimmed. And Goldman Sachs JBWere economists pointed out this morning that while the June figure was strong, it did disguise the changing pressures in the labour market.

Only 44,000 jobs were added in the June Quarter as a whole, compared with average quarterly growth of 74,000 over the preceding two years. In trend terms, jobs growth in the past couple of months (around 10,000 new jobs) has been around one third of that registered at the turn of the year. Slowing momentum in the labour market would be consistent with the bulk of the recent partial data pointing to a sharp slowing in demand, i.e.: very weak business and consumer sentiment, slowing retail sales and moderating credit growth. Macquarie Bank’s interest rate strategist, Rory Robertson points out that:

Unemployment looks to be in the process of bottoming-out near 4% and then trending gradually higher. The three-month average today is 4.3%, the same as a year ago, and up from its generational lows of 4.1% in February, March and April. With output and jobs growth slowing, I suspect unemployment will edge up to maybe 4.5-4.75% by year’s end, moving to 5% over the first half of 2009.

And there are other factors at work which will impact on employment over the rest of this year. Insurance Australian Group has revealed plans to cut 600 jobs from its Australian business; Southern Pacific Tyres last month revealed plans to cut the same number when it closes its Melbourne factor at the end of the year and now there are media reports this morning that Qantas plans to cut around 1,000 people as downsizes its operations by taking planes out of service and dropping routes and other services. — Glenn Dyer

The best and brightest. The business press loves quoting economists and investment experts – nary a day goes by when you don’t read about Chris Richardon (of Access Economics) or Craig James’s (of Commsec’s) view on the economy or share market. While handy for filling up column space, just how accurate are the so-called “experts”? The answer — not very. AFR Smart Investor gathered five leading economists at the beginning of the year and sought their views on where the ASX200 would finish 2008 and which sectors would fuel growth. While 2008 is barely half way through, our so-called experts appear to have got it completely wrong.

ANZ Interest rate strategist, Sally Auld, claimed that “oil should come back to around US$75 per barrel” while the ASX200 would finish the year at 7,000 points. Commsec’s Craig James, who is quoted on a daily basis was the most wrong, claiming that the ASX200 will finish the year at 7,550 (only 50 percent off, Craig) while “the Aussie Dollar will be about 82 cents”. James also claimed that “a recovery in housing should get under way…and Boral and CSR will be in focus”. Yesterday, CSR plummeted 15 percent on earnings concerns. Ouch.

Bill Evans of Westpac and Jonathan Pain of HFA both forecast the ASX200 to finish the year at 7000, while HSBC’s John Edwards was the least wrong, predicting a 6,800 finish for the index. Perhaps the Financial Review should be quoting more of Crikey and less of the “experts”. We claimed the market was defying reality when it was 6,278 last September and have maintained a short position ever since. Yesterday, the ASX200 closed at 4937.4. — Adam Schwab

Onion futures. All those who are quick to blame financial speculators for oil’s rapid price rise should have a look at onions. Seriously. As Fortune noted, onions are one of the few products which are not traded on futures markets. That is due to a push by onion growers in 1958 to ban derivatives trade in the vegetable. Despite not being subject to speculation, Fortune pointed out that while “oil prices have risen 100%, and corn is up 300%, onion prices soared 400% between October 2006 and April 2007, when weather reduced crops, according to the U.S. Department of Agriculture, only to crash 96% by March 2008 on overproduction and then rebound 300% by this past April.” That’s right, those evil speculators may actually be tempering the volatility of commodities like oil, reducing short-term supply and demand effects on the actual price. As for the cause of the recent oil price spike, it might just be that we are running out of the stuff, and that the Chinese and Indians like driving as much as we do.

GM’s share price goes Back To The Past. Shares in Detroit based automaker, General Motors, hit a 54-year low last night, reaching US$9.42 per share. This was General Motors’ lowest share price since 1954. How long ago was that? Crikey readers may remember the iconic film, Back to the Future. Set in 1985, the film featured Michael J Fox as a time-traveling teenager who travels way back to 1955. Yes. The last time GM traded this low, this is how cars looked:

GM shares have now dropped more than 70% in the past year and many fear that the automaker may slip into bankruptcy as skyrocketing petrol prices force US consumers to turn away from gas-guzzling SUVs, which along with its finance division, was GM’s biggest earner. — Adam Schwab

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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