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Stubborn unemployment refuses to rocket

The unemployment rate since last November, according to the ABS.

The unemployment rate since last November, according to the ABS.

This must be frustrating the bears as much as flat housing investment frustrates the bulls – unemployment keeps refusing to skyrocket the way the doomsday brigade, tabloid headlines and the federal opposition promise.

The Australian Bureau of Statistics November labour force survey is more of the same – a soft but still positive labour market with more jobs being created than lost.

It’s the nature of news that we tend only to hear about jobs being shed and not those being created. A retail chain failing is news, Woolworths opening new supermarkets is not. Five months after the start of the carbon tax, the sky still hasn’t fallen.

Not that there’s anything optimistic about today’s figures either. Ignore the dip in the seasonally adjusted unemployment rate – the trend series tells the more reliable story of more of the same: the unemployment rate steady on 5.3 per cent, up just 0.1 from this time last year; the participation rate steady at 65.1 per cent but down 0.3 from November 2011.

There were 11,535,200 Australians with jobs last month, up by nearly 120,000 over the year. Importantly, the vast majority of those new jobs (104,600) were full time – another little work force myth exposed.

The latest release contains statistical revisions based on better population numbers. The main impact is to smooth out some of the lumpiness in employment and participation rates over the past couple of years. Turns out employment growth hasn’t slowed as much as previously thought, because it was already fairly slow. The relative surge in employment in late 2010 has been revised away.

The welter of other statistics released over the past week points to the labour market weakening further as population growth picks up and Australia’s mini-fiscal cliff (OK, let’s call it “Australia’s steep creek bank”) takes its toll.

Well, that’s what’s supposed to happen anyway given the various preconditions, just as our building of dwellings should pick up given the various preconditions. Now, if the latter could just happen before the former … but it probably won’t.

As usual, those of a certain political or psychological disposition won’t want to believe the ABS. Apparently their figures are always wrong if they don’t agree with your preconceptions. But we keep getting the same result, survey after survey.

In the end, there’s a vastly stronger chance of the ABS being correct than the anecdotal claims of some businesses and individuals.

Or you can always try to turn the numbers inside out to make them fit. Crikey’s Bernard Keane deserves credit for nailing the following quote as the dumbest thing Joe Hockey has said this year: "The Reserve Bank is trying to catch a falling Australian economy. The government is making it worse by going on a big taxing, big spending program."

Er, no – it’s the opposite. And that’s bipartisan.

Michael Pascoe is a BusinessDay contributing editor

133 comments

  • Hey, Mike. I might be the odd one out in here, but I believe ya.

    Commenter
    Meekmode
    Location
    Planetearth
    Date and time
    December 06, 2012, 12:53PM
    • However one should consider the economy in the next 6 months and lets see what happens. Europe is basically gone (the masters of kicking the can down the road), the US will follow shortly with their own issues (debt, fiscal cliff etc) and Australia where only 1 in 2 is actually working????plus the private debt, government debt, ageing populaion, housing bubble and 'virtual government'.
      Up to now okay its been solid however the real test will come shortly........

      Commenter
      BANK CASINO
      Location
      Sydney
      Date and time
      December 06, 2012, 2:20PM
    • Bank Casino....Is that you Allan?

      Commenter
      paul
      Location
      melb
      Date and time
      December 06, 2012, 3:19PM
    • @BANK CASINO, a bit curious about some of your points. "Only 1 in 2 is actually working" - meaning 11,535,200 out of a population of roughly double? Can't see what else you could mean. Aren't you forgetting retirees, children, etc, or did you just not read the article or look at the graph? The available workforce isn't the same thing as total population, unless you're suggesting we send children up chimneys and old age pensioners down coal mines. The unemployment rate now is about the same as before the GFC and has barely moved in five years. "Government debt" - is low and falling, last I heard, regardless of when the budget is back in surplus. "Private debt" - peaked just after the GFC started and has been falling steadily for several years now, one reason why retail is hurting. You may be right and the economy may be about to tank, but if so you've chosen some odd markers to look at. They don't really advance your argument, while you've ignored ones that do, such ass our terms of trade, not that there's much the Government can do about international commodity prices.

      Commenter
      Bah, humbug
      Location
      Earth
      Date and time
      December 06, 2012, 3:19PM
    • Sorry, that should have been "our" terms of trade - dam*ed computer...

      Commenter
      Bah, humbug
      Location
      Earth
      Date and time
      December 06, 2012, 3:45PM
    • Give it two years for the Great Correction to really gain traction. You will see unemployment surpass 8% (maybe even double digits). Housing defaults will skyrocket and credit markets will freeze. Then, when the housing bubble finally pops the real pain will begin.

      How do I know this? Because it's happened everywhere else. Australia is not immune. Just lagging behind a few years...as usual.

      Commenter
      Jimmy
      Location
      Not_Australia
      Date and time
      December 06, 2012, 3:47PM
  • Exactly Michael. too much media. Too little news.

    Commenter
    Seriously
    Date and time
    December 06, 2012, 12:57PM
    • Mr Pascoe, you are being highly inconsistent. Recently, you wrote "our terms of trade, after their incredible rise, have only fallen to a merely amazingly high level". You were so convinced that China's "urbanisation" would plough on relentlessly and continuing boosting Australia's economy. Yesterday, you claimed that both Swan and Hockey were wrong in their "race to the fiscal cliff" (which you reiterate today) due to the risk of a budget surplus to the economy. Could you please make up your mind?
      "In the end, there’s a vastly stronger chance of the ABS being correct than the anecdotal claims of some businesses and individuals" - now that the RBA has cut the cash rate to an all-time low, it looks like the RBA agrees more with "the anecdotal claims of some businesses and individuals" than the ABS.

      Commenter
      hbloz
      Date and time
      December 06, 2012, 1:01PM
      • that is what known as "event driven journalism with analysis".

        Commenter
        PDesS
        Date and time
        December 06, 2012, 2:03PM
      • " Or you can always turn the numbers inside out to make them fit "

        Micks trick.

        Commenter
        The Oracle
        Location
        Oberon
        Date and time
        December 06, 2012, 2:40PM

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