Perhaps not even Glenn Stevens in his wildest dreams thought vindication was come so quickly and comprehensively as it did in today’s jobless data.
While any number of forecasters — again — tipped a big rise, no one expected the slight fall to 5.7% or, in trend terms, flatlining of the unemployed rate at 5.8%. That included 34,000 new full time jobs, and another 5200 part-time. Aggregate hours worked also went up.
But the national figures mask greater than usual variability between the states. NSW and Victoria both recorded big falls in unemployment, both to 5.6% from over 6%. But both recorded sizeable drops in their participation rates. Queensland becomes the new holder of the unemployment wooden spoon: joblessness surged 0.8% to 6.3%, but that was on the back of a 0.4 jump in the participation rate. South Australia also saw a big increase in participation — over 1% — but decreased slightly. Tasmania went up 0.4% on another large rise on participation, while the west went backwards by 0.4% despite a fall in its participation rate.
Some of those smaller state figures have an “end of recession” look to them, where employment starts growing but unemployment also grows as more people are confident enough to resume looking for work.
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But the key data from the ABS is this:
By either the trend or the seasonally-adjusted line, it looks awfully like unemployment is peaking.
This was a dangerous number for Glenn Stevens. A leap to over 6% would have led to an onslaught against the Reserve Bank’s decision on Tuesday to lift rates. Stevens has been careful to indicate the Bank was prepared to lift withdraw the stimulus provided by its emergency-level rates even while unemployment is rising, but that would have been no protection if today’s number had been high. Instead, his more optimistic take on the economy has been backed up by an unemployment rate that is now far short of Treasury’s forecasts.
There still remain significant problems for the Australian economy to negotiate. The interest rate differential and the health of the economy will continue to drive the Australian dollar higher. That’s good news for inflation, but seriously bad news for exporters who are already struggling with anaemic world growth. The external stimulus occasioned by China and a low dollar are fading at the same time as the Government’s fiscal stimulus is winding back and the RBA is lifting rates.
Getting the timing of the stimulus withdrawal right remains a huge challenge for policymakers. But the employment data suggests they’re doing a reasonable job so far.