The Australian Bureau of Statistics (ABS) released the Labour Force data today for March 2011 which sends some very positive signals unlike the mixed news we have been receiving over the last few months. Overall, my interpretation of the data is that the labour market is adding jobs and providing some modest scope to reduce the huge pool of unemployed. Full-time and part-time employment growth was positive and the participation rate rose slightly – a virtuous duet. Total hours of work rose for the month. But despite the media narrative that we are now “below” full employment. The bank economists were claiming this meant that the RBA should put interest rates up. My view is that there is a lot of slack left in the economy. A stunning aspect of this observation is that teenagers continue to suffer employment losses having lost 86 thousand jobs overall since the crisis then recovery began. The other reality is that employment growth is barely keeping pace with population growth so unemployment is hovering at high levels – at at time when we should be really eating into it. Given related data series recently, the RBA would be mad to increase the interest rate.
Today the Australian Bureau of Statistics (ABS) released the Labour Force data for February 2011 which sends mixed signals. Overall, my interpretation of the data is that the labour market is fairly subdued at present. Today’s data shows that employment growth was negative (but there is probably some flood impact in that figure). Participation fell which took the pressure off unemployment so the unemployment rate was steady. The positive news is that full-time employment growth was stronger and total hours worked rose in February (leading to a modest decline in underemployment). While some of the parrots in the bank economist ranks are already predicting an interest rate rise to combat some “imaginary” inflation threat, today’s data would not support a change in monetary policy in the coming months. The related data (sharp drop in housing finance) reinforces the view that there is no inflation threat building. The data tells me that exactly the opposite is the case. There is still plenty of slack in the Australian labour market and employment growth is doing nothing to mop it up. Its not my opinion – just take a look at the data! The signals are mixed today but you will not see me smiling!
According to everyone (bar me) we have an economy that is facing major skill shortages and going gang busters under the steam of the once-in-a-hundred-years mining boom. Today the Australian Bureau of Statistics (ABS) released the Labour Force data for January 2011 which would seem to contradict that impression. Today’s data shows that the labour market is anything but strong and bursting at is capacity seams. Total employment growth was modest and not strong enough to absorb the labour force growth and as a result unemployment rose. But the really telling news is that full-time employment declined sharply as did total working hours. Employment growth was driven solely by part-time employment and that means underemployment will have risen as well. Today’s data definitely doesn’t support the claims by the Government and the RBA that there is an inflation threat building and fiscal and monetary policy should contract. The data tells me exactly the opposite is the case. There is still plenty of slack in the Australian labour market and employment growth is doing nothing to mop it up. Its not my opinion – just take a look at the data! There is nothing to be happy about in today’s data.
I have very limited time today as I am heading to the airport soon and have a full set of commitments once I get to where I am going. But today the Australian Bureau of Statistics (ABS) released the Labour Force data for December 2010. As usual the bank economists got it wrong and grossly overestimated the growth in employment (last month they grossly overestimated it). Today’s data shows that the labour market has falling in a heap – employment growth is barely above the zero line and the participation rate fell sharply. While this combination led to a decline in unemployment and the unemployment rate it just meant that we have traded unemployment for hidden unemployment – not a good option. The situation is now very unclear and the impact of the natural disasters that have consumed Queensland and are heading south will clearly cause a contraction in real economic activity in the coming months before the reconstruction phase gets into gear. If the Federal government continues with its moronic line that it will see oversee a net contraction in fiscal policy despite promising billions for the reconstruction phase then the labour market will contract. This will mean that the modest gains in reducing labour underutilisation that we have seen in the recovery period to date will probably be lost – mining boom notwithstanding. Today’s data definitely doesn’t support the claims by the Government and the RBA that there is an inflation threat building and fiscal and monetary policy should contract. The data tells me exactly the opposite is the case. There is still plenty of slack in the Australian labour market and employment growth is doing nothing to mop it up.
I have been travelling for most of today and unable to write very much. But there were are few things I penned which might be of interest. I was sent a news report today which appeared in the local Fairfax press and related to yesterday’s ABS release of the detailed labour force estimates by region. This usually garners a lot of regional interest and the estimates are used by politicians, business groups etc to further their own vested interests. Rarely do any of the public statements that are made about this detailed data actually tell an accurate story. The news report in question was a classic case of this. What we should always understand is that the labour force framework is complicated and falling unemployment is not necessarily a good outcome.
The Australian Bureau of Statistics (ABS) released the Labour Force data for November 2010. As usual the bank economists got it wrong and underestimated the growth in employment. The data shows that the labour market is improving – employment growth positive and biased towards full-time jobs; a rising participation rate; and falling unemployment – the troika we look for. The commentators are almost demanding that the RBA increase interest rates sooner rather than later. But that would be a very stupid thing to do. The growth we have seen in November is required to be sustained for an extended period to ensure that we continue to eat in to the pool of unemployment and underemployment. Deliberately curtailing that growth with contractionary policy initiatives would be an act of vandalism and would deny those workers who remain idle (12.4 per cent of available labour) the chance to enjoy income earning opportunities. The data definitely doesn’t support the claims by the Government and the RBA that there is an inflation threat building. There is still plenty of slack in the Australian labour market and for the first time in several months the degree of slack fell marginally. I am not complaining – just cautious.
The Australian economy is growing and adding jobs and the unemployment rate is 5.4 per cent (having risen 0.3 points in the last month). But we avoided the recession courtesy of a timely and sizeable fiscal intervention followed up by strong growth in China (also courtesy of their significantly larger fiscal intervention (as a % of GDP)). But the treatment of the unemployed by our government is appalling. Across the Pacific, the US economy is starting to grow but only just adding jobs and not in sufficient quantities to reduce the unemployment rate and it is persisting at around 9.6 per cent. They didn’t avoid the recession and have laboured for nearly 3 years with the devastating consequences of it. The treatment of the unemployed by the US government is more than appalling. So it doesn’t matter if things are brighter or not, we still vilify the victims of the macroeconomic policy failure. That is what this blog is about. It is a depressing message!
The Australian Bureau of Statistics (ABS) released the Labour Force data for October 2010. As usual the bank economists got it wrong predicting the unemployment rate would drop to 5 per cent. In fact it rose from 5.1 per cent to 5.4 per cent because employment growth was too weak to match the expansion of the labour force. Further, employment growth fell this month and full-time employment declined. The only reason there was any employment growth was courtesy of the expansion of part-time employment. Finally, some of the bank economists recognised today (in their comments) that business conditions are easing. The previous rhetoric about an economy exploding at the seams now seems very wan indeed. There is no jobs boom going on at present. The mining states are showing deteriorating labour conditions (falling participation and rising unemployment). The data definitely doesn’t support the claims by the Government and the RBA that there is an inflation threat building. There is still plenty of slack in the Australian labour market and last month the degree of slack rose sharply.
The national ABC news carried the headline – Jobs surge smashes expectations after the ABS released the Labour Force data for September 2010. Which expectations are we talking about? Answer: the estimates of the bank economists. So that fact they were wrong – as usual – doesn’t give us very much information at all. After the data release that lot quickly resumed their inflation-obsessive mantra claiming that the RBA would now have to hike rates in November. They had said that the RBA would have to hike this week and were wrong. I often wonder if their employers (the banks) actually ever take their advice seriously. Perhaps the fact the banks keep making huge (unseemly) profits suggests they don’t. Anyway, the labour market showed signs of improvement this month (full-time employment up) although unemployment rose. But I would hardly call this jobs boom. It is true that participation rose by 0.2 percentage points which is usually a good sign when employment growth is positive because it means the labour force is expanding and more people are confident of finding work (reducing hidden unemployment). But employment growth is still not strong enough to reduce unemployment and total hours of work fell slightly. Does this data signal an inflation threat as per the ranting of the bank economists? Answer: no! The signs of improvement are suggesting just some better alignment of the stars. There is still plenty of slack to be absorbed yet (total labour underutilisation remains around 12.5 per cent).
The national ABC news carried the headline – Unemployment slashed by jobs boom after the ABS released the Labour Force data for August 2010. While the net employment change was more than the market economists predicted (why would that surprise anyone given their tendency to continually get it wrong) I would hardly call the outcome a jobs boom. Further, the broader indicators of labour underutilisation deteriorated in the August quarter of 2010 with underemployment rising by 0.4 percent. There are 12.5 per cent of workers (at least) idle in one way or another (unemployed or underemployed). The fact that our teenagers continue to experience negative employment growth is also telling. While the bank economists have hailed today’s figures as indicative of “very strong across the board” performance and are whipping up the inflation bogey, the reality is different. We continue to waste a huge amount of our potential capacity and there are no inflationary pressures coming from the labour market at present.