Yesterday, the third-quarter National Accounts data revealed that real GDP growth is trailing behind the underlying population growth which means that per capita incomes have been falling. Today’s release by the Australian Bureau of Statistics (ABS) of the Labour Force data for November 2012 reveals that employment growth is also failing to keep pace with the underlying population growth and the only reason unemployment is not skyrocketing is that more workers are dropping out of the labour force as a result of the lack of job opportunities being created. The data is unambiguously bad. The unemployment rate fell to 5.2 per cent but only because the participation rate fell. The fact that workers are giving up looking for jobs is a portent of a very sluggish labour market. So unemployment fell but hidden unemployment rose. The trend performance of the labour market is flat and these monthly shifts are merely fluctuating around that flat trend. The data is not consistent with any notions that the Australian labour market is booming or close to full employment. The most continuing feature that should warrant immediate policy concern is the appalling state of the youth labour market. My assessment of today’s results – worrying with further weakness to come. The government has in the past few weeks insisted it will pursue its budget surplus obsession and announced further cuts in discretionary net spending. Not only will that act of fiscal vandalism fail but in doing so it will further undermine a very weak labour market.