The Australian economy is not shedding jobs, in fact part time jobs are still being created, and more people joined the ranks of the unemployed looking for work in May in a surprising example of optimism that would tend to support the sharp rise in consumer optimism this week.
In fact the one point to be made with certainty from today’s jobless figures from the ABS is that the Australian labour market is not as stricken by recession as America’s, or Europe’s, or Japan’s.
Just as our economy continues to bumble along in low gear, but at rates well above those of our major trading partners (except China), so too is our labour market much healthier than those offshore.
Whatever anyone makes of the rise in the unemployment rate to the 5.7% level of April is that it isn’t the 9.4% of the US. That’s right on the forecast from the market, which was widely tipped by one and all.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
The figures include a revision in the April jobless figure to 5.5% from the initial 5.4% reading.
The May report is less “rubbery” than April’s because the ABS has moved back to the old sample base used up to June last year when it was cut as a budget cost cut. That was a false saving for such an important economic indicator.
America’s jobless toll in May increased by just under 35,000, an ‘improvement’ from the more than half a million toll in the previous four months.
Australian employment fell by 1,700 to 10,793,100, according to the ABS figures, with full-time employment dropping by by 26,200 to 7,643,100 and part-time employment down by by 24,500 to 3,150,000.
The number of people unemployed jumped by 27,200 to 651,200 as the number of people looking for full-time work increased by 30,000 to 482,600 and the number of persons looking for part-time work fell by 2,800 to 168,600.
The fact that the April figure was bumped up, and the strong showing in part time jobs are both positives for the economy and for employment. Conditions are nowhere as dire in the wider economy as some commentators would have us believe, such as writers on the Noon ABC Radio News in Sydney with the blunt headline “Unemployment Gets Worse”.
It did and it didn’t because of the surge of people looking for work (a bull point) and the jump in part time employment.
The figures support the notion that the domestic economy remains weak, and the export economy is not to strong, but they do not support the contention that Australia is headed for a surge in unemployment above 9%.
No doubt some commentators will emerge to forecast gloom and doom: the drop in national income and another fall expected in our terms of trade from the lower iron ore and coal prices, will have an impact; but it will be an impact shared with offshore owners of the companies and mines. In fact an 8% peak could be a real possibility (provided there’s no significant weakening in employment in coming months).
The NAB no longer sees the economy contracting by as much as it did a month ago because of the better than expected first quarter growth figures, nor does it see unemployment rising sharply.
Commodity prices have jumped sharply, especially oil, copper, lead, zinc and aluminium (all at five or seven month highs) and the lows of December-January seem a long way away. The stronger Australian dollar will hurt export returns, putting pressure on some companies and on our balance of payments (but easing the debt burden). But it will also help push inflation lower as it trims the rise in oil prices.
The Australian economy is in a very different place compared to Japan. Figures out today showed the economy contracted at a terrible annual rate of 14.2% in the March quarter (down from the original 15.2% estimate). The 1% improvement was due to higher than first reported spending by business.
Australia’s annual rate is running at just over 1%: we are growing. On a quarter on quarter basis, the Japanese economy fell 3.8% in match from the December period.
The ABS said the under utilisation rate rose 1% in the last three months to 13.4% (and was highlighted on the ABC’s World Today, Stephen Long has a way of decrying the obvious stronger parts of the headline numbers).
But even in this measure, Australia is well under that of the US where the rate was 16.4% in May.