Once again the doom and gloomsters and the Hanrahans will have to eat their jobs statistics and reflect on their beliefs about the Australian economy. Strong jobs data from the Australian Bureau of Statistics backs the Reserve Bank's decision last week not to cut its cash rate. Unless there's a significant worsening in Europe or the local jobs market in the next few months, you can just about rule out any more rate cuts. In fact, a rate rise might be in the offing later in the year if we get more months like January for jobs
The figures out this morning show that a total of 46,300 full and part-time jobs were added last month, more than offsetting the loss of 29,000 in December that brought forth a wave of handwringing and grim predictions. That was the largest number of jobs for over a year.
The employment data adds to the growing impression that the Australian economy is gathering pace after being whacked last year by the floods and cyclone Yasi in January, the uncertainty from Europe and a slide in business and consumer confidence.
There were strong performance right across the country. A big fall in the unemployment rate in NSW -- down from 5.6% to 5.2% -- is great news from the country’s biggest state that for so long has underperformed courtesy of a disastrous Labor government. Victoria was steady at 5.1%. Queensland was also steady at 5.4% but there was a big rise in participation, nearly half a percentage point, led by a surge in female participation. WA was also steady -- and still the best in the country -- at 4.1% but that also saw a big rise in participation, 0.7%.
The unemployment rate, seasonally adjusted, dipped to 5.1% (5.2% on the smoothing trend basis).
There’s been incessant publicity about job losses lately -- the 500 jobs lost Qantas today and the 1000 at the ANZ earlier in the week are the latest examples. AAP even produced a table of recent job losses this morning showing roughly 6000 jobs lost or could be lost. Every one of those losses have generated headlines, grim productions, moans and groans from unions, employers and those involved. And everyone represents a real person facing dislocation.
But as Ross Gittins pointed out in an excellent piece yesterday
, anecdotes don't tell anything like the full story. Compare those 6000 to the 12,300 full-time jobs created in January and the more than 46,000 new jobs for the month. There are no anecdotes floating around about those.
The jobs market is
weak in sectors like finance, retailing and some areas of manufacturing. But it is strong in others (and sometimes it's strong in some sub-sectors of retailing and manufacturing, too). That is constantly overlooked by the jobs alarmists who overcook the numbers or the trends in the economy.
The January numbers also reversed the trend in December, when it was the absence (or, rather, non-seasonal appearance) of part-time jobs for females in the group 15 to 24 that helped produced the sharp drop in that month. "The increase in seasonally adjusted part-time was driven by an increase in female part-time employment whereas the increase full time employment was driven by an increase in male full-time employment," the ABS said.
The ABS reported an increase in the labour force participation rate, which has been trending lower since the end of 2010: 0.1 percentage points in January to 65.3%. In fact, the economy generally has started 2012 much stronger than a year ago when it was flattened by the supply shock and boost to inflation delivered by the floods and cyclone.
While Europe is still a big concern (and why the market tanked this morning), the economy is solid, as new RBA Deputy Governor Phil Lowe said in his first speech for 2012 in Sydney:
"... the Australian economy started 2012 in relatively good shape. Growth has been around trend and inflation is consistent with the target, and there are reasonable prospects for this to continue. We also have much more flexibility to deal with unfolding events than almost any other developed economy."
There's a slew of data to back this up. There was a noticeable pick-up in housing finance in December, after the two rate cuts, but it's still at multi-decade year lows according to some measures. While retailing is sluggish, it is not a disaster area that many media writers and industry players would have us believe. Women's fashionwear retailer Noni B lifted profit by a bit more than it expected in the six months to December; The Reject Shop (which was nearly knocked out by the impact of the floods a year ago, closing a just-opened distribution centre in Brisbane) lifted profits in the tough December half-year and expects to lift them again this half and open seven new outlets.; consumer electronics retailer JB Hi Fi wasn't consumed by the slide in TV prices, the rise of the dollar or weak demand: it survived and reported results slightly better than expected for the December half-year.
Car sales rose in January, which had the best start to a year for five years (since 2007). Online group Carsales.com.au lifted profit 20%.
And Westfield Retail Trust, which owns 50% of the Westfield malls in Australia, along with parent Westfield Group, reported solid profits and a perk-up in sales in December throughout its 55 malls across Australia and NZ. Some sectors were weak, particularly in Sydney, but the group expects sales growth to continue this year.
None of this is evidence of the sort of gloom that appears to grip so many commentators for whom the simple economic narrative is that the mining sector is doing fine by the high dollar and higher bank funding costs are wrecking the rest of the economy. The data simply doesn’t show that, regardless of however many anecdotes emerge about job losses.