How weak was Australia’s March quarter GDP result last week? The government used to boast of how Australia was growing faster than other developed economies. Now we're weaker than heavily indebted Japan: Japan just reported economic growth of 0.6% for the March quarter for an annual rate of 2.2%, compared to 1.6% in the fourth quarter of 2018. Japan, by the way, has full employment (2.4%) thanks to a shrinking population -- and no wages growth. (Don't tell all the "wages growth is just around the corner" pollyannas here in Australia's governing class.)

But the labour market is traditionally a lagging indicator on economic growth -- both in downturns and recoveries. Employers continue to add workers even when sales are starting to slow, in the hope that the slowdown is temporary, then they cut jobs if it continues and deepens, starting with reducing hours and then positions -- and that continues through the trough and into the upturn, until they're sure conditions have improved. Then they wring more output from smaller work forces through longer hours, until higher demand prompts them to add jobs (part-time first).