Enjoy the sight of economists and analysts utterly confused. Today’s unemployment numbers will confound everyone except the most hopeful commentator.
And they’re beyond the Government’s wildest dreams. The faint hope yesterday’s retail sales figures gave to the prospects of Australia avoiding another quarter of negative growth is now rather closer to legitimate expectation.
It’s possible that there’s something wrong with the numbers. Or, more likely, that the March numbers were flawed and overstated the decline in employment then. But Australia is now the only developed country with falling unemployment — it’s back to 5.4%. Any unemployment figure with a 5 in front of it at the moment is world-beating.
Full-time employment went up by 49,100 and part-time employment fell nearly 22,000. The drift to lower hours seems to have halted. Nor can the fall be blamed on the participation rate — it fell only marginally across the country and even went up in South Australia. Australians are not abandoning the job market en masse.
The fall in unemployment is driven by pretty much one thing: NSW. After dragging the economy down for more than a year, NSW recorded a huge fall in unemployment, mainly because of a jump in part-time employment, from 6.8% back to 6%. Western Australia also saw a big fall, down 0.5% to 4.5%, back toward full employment. Victoria was flat at 5.6%, South Australia had a 0.4% fall, and Queensland had a rise of 0.1%.
So if there is something wrong with the figures, the problems are right across the country.
Barring a dramatic reversal next month, this appears to end the debate about the Government’s stimulus strategy. It went hard, and early, targeting the big-employing sectors of retail and construction, with staggered impacts, trying to prop up temporary demand with handouts and home buyers’ grants until its infrastructure spending began to kick in from the second quarter of this year. Demand — as suggested by retail sales and construction in new housing, as per data on housing starts, have both responded. While the industry breakdown of the April employment figures isn’t yet available, you can bet it’s retail and construction that have held up best in today’s data.
It could all go to hell with the next set of numbers, of course — the chief characteristic of this crisis has not so much been the incapacity of experts to forecast what the data will tell us, but the immoderation of our reaction to successive pieces of good and bad news as they emerge to astonish us. But for now the Government has a strong case that its economic strategy has worked.
The Opposition will welcome the fall and declare how pleased it is that employment is holding up, but there’ll be plenty of anguish in Coalition ranks. They’ve been calling the Government’s strategy futile and these numbers suggest they’re very wrong indeed.