Against admittedly anecdotal evidence to the contrary from low consumer and business confidence, slumping activity in housing and retailing, and job losses among small lead and zinc miners in Western Australia and NSW, the Australian Bureau of Statistics claims that employment rose 14,600 in August, and that the unemployment rate fell to 4.1%.
The ABS, in the second of a newly constructed labour force series (brought on by the Rudd Government’s $20 million penny pinching cut to the ABS budget), said this morning that employment “increased by 14,600 to 10,744,300. Full-time employment increased by 7,500 to 7,729,700 and part-time employment increased by 7,200 to 3,014,600. “
The ABS said unemployment fell “22,900 to 457,300. The number of persons looking for full-time work decreased by 4,000 to 321,900 and the number of persons looking for part-time work decreased by 18,900 to 135,500.”
And the unemployment rate eased “by 0.2 percentage points to 4.1%. The male unemployment rate decreased by 0.1 percentage point to 3.8%, and the female unemployment rate decreased by 0.3 percentage points to 4.4%.”
With the participation rate down slightly, by 0.1% in the survey to 65.2%, the fall in unemployment can be partly explained, if the survey figures are accurate.
With a growing list of companies, from miners like Perilya and CBH, to Qantas, to Allco, MFS, Southern Pacific Tyres, General Motors, Don Small Goods, Fairfax and this week the ANZ, jobs are obviously being shed. Around 400 jobs have gone, or are going in the Cobar area where mining company CBH is restructuring its Endeavour mine. Perilya has cut jobs at its Broken Hill operations as well because of weak lead and zinc prices. The Lennard Shelf lead and zinc mine in WA shut as well.
There are few, if any major employment gains being reported. Mining companies outside of coal and iron ore are retrenching or shaving costs because of the drop in world prices in the past two months. Retailing is doing it tough, especially in NSW, and building is starting to find conditions tough as well, especially in the commercial sector in South East Queensland where a growing number of builders have gone broke, or are in receivership or liquidation.
It was third monthly rise in employment and indicates the economy is still running strong, even if job growth continues to slow.
But as puzzling as these figures were, there was something very clear and direct in New Zealand this morning with the country’s central bank slashing its key interest rate 0.50 to 7.5% and declaring the economy was in recession.
That cut was more than most economists had forecast and indicates just how seriously the New Zealand Reserve Bank is now viewing the health of the country’s economy. The economy contracted in the first quarter and although official growth figures are not due until September 26, the bank’s head, Dr Alan Bollard, said in a statement:
With medium-term inflation pressures expected to ease, it is appropriate to move toward a less restrictive stance
He said the half a per cent cut “is warranted in light of tightness of credit conditions and the time it will take to affect actual interest rates faced by households.”
Mr Bollard joined the NZ Treasury and economists in forecasting the economy also contracted in the three months to June 30, putting the nation in its first recession since 1998.
Bollard said inflation will return below the 3% limit of his target range by the first quarter of 2010.
The central bank cut rates in July by 0.25% from the record 8.25%. the New Zealand dollar fell under 66 US cents after the cut was announced, to be down by around three quarters of a cent in less than an hour.