There’ll rarely be a more revealing economic contrast than today, with the world’s sharemarkets aflame courtesy of Italy (standing in for Greece as the euro crisis du jour), and the Australian economy sailing serenely on, defying predictions of a softening labour market with sound job numbers this morning from the ABS.
The highlights: a seasonally adjusted unemployment rate of 5.2% (technically down 0.1% on the revised September outcome). Full-time employment up 20,000, part-time employment down 10,000. Aggregate monthly hours up 10.4m.
No state really had a bad number. NSW saw a fall of 0.2 to 5.3%, the best jobs result since Barry O’Farrell got into power. Victoria was steady on 5.3%. Queensland had a sizable rise in unemployment, 0.3 to 5.7%, but on the back of a big 0.6 jump in the participation rate. South Australia had a big fall, 0.3 to 5.3, but off lower participation; WA fell 0.1 to 4.2% — though that was on a big 0.6 fall in participation, and Tasmania followed Queensland in having a rise in unemployment (to 5%) but a big participation increase as well.
There’s certainly nothing in these numbers to suggest the RBA’s call on the economy last week was astray. Europe is the main threat to Australia, a threat that appears to be crystallising more by the day as Italian bond yields rocket through 7% and French and Spanish yields lift as well.
Economists had been tipping a fall in employment amid softer conditions but yet again the doomsayers were defied — something of a regular theme in the Australian economy, and something to bear in mind while contemplating the carnage on the equities markets here and around the world. With low unemployment, low inflation, low public debt, improving consumer sentiment, further room to move on monetary policy, a currency with plenty of room to fall and well-regulated banks, Australia is well-placed — better placed than nearly any other Western economy — to ride out whatever emerges from the series of debacles continuing to unfold in Europe.
A tax base over-reliant on corporate earnings is our only systemic weakness in the face of a global slowdown. But if there’s another GFC, Australia will go into it nearly as strongly placed as it did the last one.
It’s testimony to 30 years of economic reform, high-quality bureaucrats and competent Treasurers on both sides of politics. Not, of course, that voters see it that way, or even many commentators.
Another disappointment to Suzanne Blake, the Truth Hurts et el who have been predicting a recession for over 12 months now.
The big figure of the week isn’t unemployment but consumer confidence, a 6 point rise. It was only a matter of time before this figure rose as the poor sentiment was not based in the reality of low inflation, unemployemtn and interest rates but fear of the unknown. With savings rates spiking a cut in the cash rate was always going to quickly translate into greater confidence and will soon show up in improved retail trade figures (although truth be told I believe they improved last quarter already).
Most Aussies really dont know, or acknowledge, just how well placed we are economically. As we compare ourselves with the rest of the trading world…. we are doing so well.
This is a timely and sensible article, thanks Bernard. Pity it is not more widely read.
Agree Jim – Might have someting to do with the fact the oppostion keep telling us how bad things are!
What’s with this new fixation on quarterly and monthly results by the Left. It was that short-term tea leaf mentality that got the world economy into the abyss it currently is.
The Aussie dollar is at levels not seen in over 30 years. The non mining export economy has been turned upside down and having used every trick it can to hang in there is at death’s door.
The education export sector is starting to see the full impact of the dollar flow through to falling enrollments.
Inbound tourism is now based on low value Chinese tourists who wander around BrisVegas and the like spending as little as they can. While, the traditional big spending Japanese, American and European tourists are going elsewhere to get better value.
The value-added manufacturing sector is in dying days shutting up shop and moving offshore or just going to the wall.
The multimedia export sector is living off Family Tax Benefits. And the software industry sells out the minute it can.
Farmers all over regional Australia are letting their fruit rot on the trees, or plowing the fields back over. The local canneries are all but gone and those that are left are buying imported foods.
And then we have the resource sector which many are saying has reached it’s peak earnings and faces the twin threat of decreased demand and increased supply. South America is not Africa and the sovereign risk issue is simply not going to wash with the commodity buyers.
Moreover, for thousands of years the price of commodities has been falling – why it would stop now when we have barely scratched the surface of what we can dig up on Planet Earth is the question few analysts seem to want to ask – let alone answer.
The longer the dollar stays at its speculative value rather than its fair value the more damage we do to the rest of the non mining export economy that took much of the past 25 years to build. It won’t be put back together overnight – and much of it will be permanently flushed down the drain before the Aussie corrects.
It could easily take another 25 years to rebuild what we had in place a few years ago. And for what – a few years of hyped up mining profits against the spectre of foreign central banks speculating our currency through the roof while our Government quotes free market ideology – when no other government on the planet gives a toss about economic ideology.
In the real world, when things look really rosy – is when you should really start to worry.
And I’m card carrying member of the Labor Party.
“But if there’s another GFC, Australia will go into it nearly as strongly placed as it did the last one.”
Given Bernard’s predictive record, retain this quote.
He doesn’t seem to grasp that this is a small, export-dependent economy. As Europe and the USA sink into their cesspit of debt, the most likely result for Australia is a long period of stagnation- a high dollar, declining revenue, shrinking margins…hardly Greece, but a pinched, querulous future. Property is still wildly overpriced here- expect a big drop- with the usual knockons…
and don’t bank on China…