Once again the re-worked labour force figures from the Australian Bureau of Statistics released a questionable result. The credit freeze has hurt Australia, some companies are laying off people, downgrading earnings and in retailing some are reporting falling sales, and yet the ABS would have us believe that October was a better month than September for jobs.
In fact, the ABS reckons that Australians lost full time jobs in October, but many more were offered part time employment. Due to the flexible nature of measuring what employment actually is (it’s an hour’s work a week), that could cover people who were moved from full time contracting work for example, to part time. Like the US we do have a hidden “under-employment” situation that isn’t picked up with the monthly figures.
But the ABS’s monthly Labour Force figures, issued this morning showed that overall employment rose 34,300 in October to 10,768,300 and the unemployment rate didn’t change from the 4.3% set in September.
“Full-time employment decreased by 9,200 to 7,688,200 and part-time employment increased by 43,500 to 3,080,100.” It said “unemployment increased by 7,000 to 487,900. The number of persons looking for full-time work increased by 10,200 to 338,200 and the number of persons looking for part-time work decreased by 3,200 to 149,700.” The participation rate was steady on 65.2%.
This is what the ABS said about September:
“Employment increased by 2,200 to 10,737,400. Full-time employment decreased by 15,400 to 7,706,800 and part-time employment increased by 17,700 to 3,030,500; unemployment increased by 21,700 to 479,600. The number of persons looking for full-time work increased by 4,400 to 326,800 and the number of persons looking for part-time work increased by 17,300 to 152,800.”
On the face of it, with the credit crunch becoming a freeze from mid- September, the impact in that month looked to have been muted. The market had been expecting an increase in jobless numbers of around 10,000, with the unemployment rate rising to 4.4%.
But that wasn’t the case: fewer full time jobs were lost last month than in September, while more part time jobs were created.
The series was reworked to achieve cost savings when the Federal Government cut the ABS budget by $22 million: the retail trade series was also reworked to cut costs by shrinking the sample, which is what has happened to the labour force sample.
Pressure on the ABS has forced it to abandon the “rubbery” retail trade series and reinstate the old sample size. It seems pressure should now be applied to get rid of the new labour force series and go back to the older, more reliable figures.
If this is an OK number, then the Australian economy was a lot stronger in October than in September. For example, building approvals plunged to a seven year low in September and retail sales probably fell by just over 1% in a seasonally adjusted series buried in the rubbery trend series.
That is the sort of news that should see unemployment rising: retail sales and building approvals have been falling all year.
Motor vehicle sales fell by 11.4% in the month and car sales were down 13.8% from October 2007. Car sales are now in danger of falling below last year’s over the final two months of 2008 as more and more people postpone or abandon purchases.
In the mid year economic update yesterday the Federal Government forecast unemployment rising to 5% by June next year and 5.75% by June 2010. There are eight months for that to happen, so we face some rotten employment numbers in that time, if this present labour force series is accurate.
The Australian figures were much stronger than those in New Zealand where unemployment has hit a five year high.
New Zealand issues its jobless figures every quarter and the numbers of the September quarter were out this morning. They showed the full extent of the country’s slide into a recession (two successive quarters of negative economic growth).
Statistics New Zealand said that in seasonally adjusted terms, the unemployment rate increased to 4.2% from 3.9% in the June quarter. And the latest Roy Morgan Weekly Consumer Confidence Rating has shown a rise of 3 points to 90.3. The survey was done last weekend which was before the widely anticipated interest rate cut by the RBA on Tuesday. The rate cut of 0.75% wasn’t anticipated.