Business economists have had a couple of misses this week.
Yesterday they forecast a 0.8% rise in third quarter economic growth and it turned out to be a 1% rise, with the 1.2% increase in the June quarter upped to 1.4%, one of the highest quarterly rates for years.
The GDP figures, some economists cautioned, were a lagging indicator, forgetting that’s how some described the strong June quarter figures when that report was released. They ignored the impact of the recovery in coal exports and other activity in Queensland, plus the gathering pace of the resources investment boom. The outcome was another solid rise in the three months to September.
Today they forecast a rise of about 10,000 in the number of new jobs created last month, according to the usual monthly survey by AAP.
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That was a miss, bigger than the GDP one.
The Australian Bureau of Statistics said there was a net loss of 6300 jobs in November, with the jobless rate rising to 5.3% (seasonally adjusted), hardly threatening. But employment is supposed to be a lagging indicator, so is that telling us that things have worsened in the labour market in the past month?
Well the loss of nearly 40,000 39,000 full-time jobs would be a big hint, as would be the drop of more than 11 million hours in the number of hours worked last month. But what then of the 33,600 part-time jobs created last month?
Usually its a sign of either employers cutting hours or days because they are not certain that the slowing in demand might last: the drop in the number of hours worked would tend to bear out that idea. But a rise in part-time work can also signal a rise in demand and employers cautious about how long that will last, so they gradually add part-time workers. But the fall in hours worked would mitigate again that as an explanation.
There is, however, less to the figures than meets the eye. The state data explain a lot: in Victoria and Queensland, unemployment went up, off the back of falls in the participation rate — not a good sign. The Baillieu and Bligh governments have some explaining to do. But unemployment remained steady in South Australia and Western Australia — and over in the west, the participation rate went up 0.5 points, a big rise even for that volatile indicator.
And best of all, unemployment fell again in NSW for the second month in a row, suggesting the O’Farrell government is finally getting the joint moving in Australia’s biggest state economy.
But one thing is certain: jobs creation has slowed to just 0.4%, seasonally adjusted in the past year. So unless there’s a pick up in employment growth, there growth rate will go negative in the next couple of months. There are now just 6300 more people employed (11.463 million) than were employed in November of last year (11.457 million). In trend terms there’s 4000 less. Victoria, in particular, needs close watching. As our second biggest economy, it’s going to have a big impact on employment in coming months.