Menu
Weak jobs trend confirmed by data

Weak jobs trend confirmed by data

The latest round of official figures confirms the labour market is underperforming - not generating enough jobs to stop the unemployment rate from edging higher.

The unemployment rate rose to 5.4 per cent in December, from an upwardly-revised 5.3 per cent in November, the Australian Bureau of Statistics said on Thursday.

The rise, the result of an estimated fall of 5,500 in the number employed, was no fluke.

Against the background of gloomy readings from indicators like the ANZ's job ads survey and the ABS survey of job vacancies, and an unmistakable slowdown in the economy's growth rate over the middle of 2012, it was well anticipated by economists.

After a distinct flattening in the trend in employment growth from around mid-2012, the jobless rate rose to a peak which the revised figures now show to have been 5.5 per cent in September.

The average for the final four months of 2012 was 5.4 per cent.

With current trends in population growth and labour force participation, the "break-even" employment growth rate, enough to stop the unemployment rate from creeping higher, is probably about 13,000 a month.

But the bureau's estimates show the trend in employment growth is only about half that, at 7,000 a month.

So the labour market is just not doing it, and there's no reason to expect that it will suddenly start doing it in the coming few months.

The board of the Reserve Bank of Australia (RBA) is due to hold its first monthly monetary policy meeting of the year on February 5, after the traditional January break.

At that meeting, the central bank will have to decide whether the delayed impact of earlier interest rate cuts will give the economy enough of a boost to offset the effects of a severe tightening of budgetary policy at the state and federal level, the persistently high exchange rate and the looming - perhaps already arrived - peak in resource investment.

The jobs figures will add to the case for further rate cuts, because they suggest the cuts so far - beginning in November 2011 - have gained little traction.

But the RBA will still want to look at the December quarter inflation figures next Wednesday, and may wish to look at other key data before committing itself to a cash rate at a new 50-year low.

Those figures would most likely include the next ABS quarterly survey of business capital spending plans, due on February 23, and possibly even the December quarter economic growth figures on March 6, the day after the March 5 RBA board meeting.

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags job lossAustralian Bureau of Statistics (ABS)

More about ABS AustraliaANZ Banking GroupAustralian Bureau of StatisticsRBAReserve Bank of Australia

Show Comments
[]