There’ll rarely be a more revealing economic contrast than today, with the world’s sharemarkets aflame courtesy of Italy (standing in for Greece as the euro crisis du jour), and the Australian economy sailing serenely on, defying predictions of a softening labour market with sound job numbers this morning from the ABS.

The highlights: a seasonally adjusted unemployment rate of 5.2% (technically down 0.1% on the revised September outcome). Full-time employment up 20,000, part-time employment down 10,000. Aggregate monthly hours up 10.4m.

No state really had a bad number. NSW saw a fall of 0.2 to 5.3%, the best jobs result since Barry O’Farrell got into power. Victoria was steady on 5.3%. Queensland had a sizable rise in unemployment, 0.3 to 5.7%, but on the back of a big 0.6 jump in the participation rate. South Australia had a big fall, 0.3 to 5.3, but off lower participation; WA fell 0.1 to 4.2% — though that was on a big 0.6 fall in participation, and Tasmania followed Queensland in having a rise in unemployment (to 5%) but a big participation increase as well.

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There’s certainly nothing in these numbers to suggest the RBA’s call on the economy last week was astray. Europe is the main threat to Australia, a threat that appears to be crystallising more by the day as Italian bond yields rocket through 7% and French and Spanish yields lift as well.

Economists had been tipping a fall in employment amid softer conditions but yet again the doomsayers were defied — something of a regular theme in the Australian economy, and something to bear in mind while contemplating the carnage on the equities markets here and around the world. With low unemployment, low inflation, low public debt, improving consumer sentiment, further room to move on monetary policy, a currency with plenty of room to fall and well-regulated banks, Australia is well-placed — better placed than nearly any other Western economy — to ride out whatever emerges from the series of debacles continuing to unfold in Europe.

A tax base over-reliant on corporate earnings is our only systemic weakness in the face of a global slowdown. But if there’s another GFC, Australia will go into it nearly as strongly placed as it did the last one.

It’s testimony to 30 years of economic reform, high-quality bureaucrats and competent Treasurers on both sides of politics. Not, of course, that voters see it that way, or even many commentators.

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Peter Fray
Peter Fray
Editor-in-chief
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