Don’t look to today’s labour force data from the Australian Bureau of Statistics to make the current health of the economy any clearer.
In fact the ‘economy’s is bad’ mob and those who see it trending along, with good and weak bits, will be able to claim something from the figures. But the bottom line is a lack of clarity, so don’t believe anyone who says this adds to pressures for a rate cut. Remember, the RBA cut rates in the December quarter when, as we found out yesterday, growth had slowed.
While January’s release had been emphatic in showing a 46,300 rise in new jobs, and a dip in the unemployment rate to 5.1%, from 5.2% in December, the February figures showed a rise in the jobless rate to 5.2% (so in reality, no change from what reported for December of last year) and a drop in employment of 15,400, all part-timers.
The ABS said the “decrease in employment was driven by decreased part-time employment, down 15,400 people to 3,380,400, while full-time employment remained at 8,063,600. The decrease in seasonally adjusted part-time employment was driven by a decrease in female part-time employment.”
You’ll recall that was behind the fall in employment in December, when fewer-than-expected pre-Christmas jobs in retail opened up.
Seasonally adjusted, the number of people unemployed increased by 16,400 people to 632,200, unlike January when there had been a fall of 15,300. The labour force participation rate decreased by 0.1 percentage points to 65.2%.
There were mixed results among the states. NSW maintained January’s strong performance and stayed level at 5.2% seasonally adjusted, with no change in the participation rate — a good performance from the biggest economy. But unemployment in Victoria rose 0.2% to 5.4%. February was thus the first time since 2006 that unemployment has been higher in Victoria than NSW. Unemployment also rose 0.3% in Queensland, off the back of a big fall in participation, 0.4%. It went up in South Australia, 0.1% to 5.2%, off another fall in participation, but unemployment fell in WA, down 0.1% to 4.0%.
Participation rate is the worry on this front: it’s static or falling.
But the issue even more complicated: the ABS said the monthly aggregate hours worked series showed an increase in February, up 21.6 million hours to 1,616.6 million hours, compared to January when they fell 231 million. So was that more a case of employers and the ABS ‘straightening’ up survey data from both months and reconciling it?
The trend data provided little guidance and if anything added to the uncertainty. It showed no change in the jobless rate of 5.2%, a rise of just 1,100 in the number of people employed and a fall of 1,700 people unemployed. So more confusion. Coming on top of the weaker than expected GDP figures yesterday, all we can say is that the economy is definitely sluggish in places, with jobs growth barely keeping pace with population and work force growth.
But amidst all the data, there are some that will make life more difficult for the business lobby and their media spruikers.
Also out today were industrial disputes data which show that days lost to industrial disputes in the December quarter nearly halved from the September quarter, from 101,000 to 54,000. The rise in industrial disputes has been repeatedly cited as an example of the inflexibility of the Fair Work Act, despite evidence that employers were gaming the FWA mechanisms. Let’s see how the AFR reports that tomorrow.
And yesterday here was some good news in the national accounts — a clear pick up in labour productivity. The broadest measure, GDP per hour worked, rose by 0.4% in the December quarter, as we pointed out yesterday. In the market sector of the economy, where productivity is more easily measured, the rise was a solid 0.6%. Through the year, those productivity growth rates were 1.1% for the whole economy and a respectable 1.8% for the market sector.
It gets even better once the mining and utilities (electricity, gas, water and waste) sectors are excluded. That’s where there’s been heavy investment in recent years without a commensurate increase in output for the time being,
The ABS said trend real unit labour costs fell 0.6% while the trend non-farm real unit labor costs fell 0.8%. That fall in real labour unit costs came despite an 0.9% rise in employee compensation in the quarter (up 7.4% over the year). That came from a 0.3% rise in the size of the workforce and a 0.6% rise in average compensation per employee.
Both of these undermine the incessant whingeing from business and some in the media about poor productivity, regulation and unions driving up wage pressures.
The truth is, slack management, dud boards and companies too intent on short-term profits and not investing for the future have had as much of an impact on productivity as IR laws, red tape or aggressive unions.
See Jimmy. There has been a lag effect, but its biting now.
It will bite further when the carbon tax starts.
SMH scathing on incompetent “naive” Swan. So he has Shorten out there talking to media on the numbers!!!
“Australia’s jobs market is still flat. In the past few months, job numbers rose in November, fell in December, rose in January, and now fell in February: down by 15,000, to end up back where they started.
The headline unemployment rate climbed back to 5.2 per cent.
This shows the naivety of comments last month by Treasurer Wayne Swan and the Reserve Bank seeing the January figures as a sign of improvement, rather than the statistical static you get when you try to use figures for the wrong purpose.
The Bureau keeps warning us that its monthly job movement figures are too imprecise to rely on, and urges us to use its smoothed trend data instead.
Pity the Treasurer and the Reserve don’t listen.
And the trend figures this month tell us pretty much what they told us last month: there’s virtually no job growth going on out there”
The economy is sluggish and posted 2.3% growth compared to the RBA’s forecast of 2.75%, way off the mark.
The RBA kept on ignoring half of the data which have been negative and focused on the positive only. Last data for business condition for the services sector showed big contraction, in fact last year there were only two months which it posted expansion. Dec. employment was revised to -35k, company’s gross operating profits in Q4 went down, private capital expenditure went down, new home sales went down and construction index still running in negative territory for about two years now.
The reason productivity went up is because last year many minings were in the project construction phase which caused lower productivity data. Now they are in the production phase which sell the mineral hence more income than layout so higher productivity recorded.
When will the RBA wake up to see that the huge differential between central banks’ interest rate is causing the over-valuation of our dollar and is hurting our tourism, manufacturing and exports industri es? Then we also don’t get much benefit from the high dollar as they suggest, the fact is many importers don’t pass on the cost and keep the profit from the high dollar.
The RBA’s attitude is the economy is doing ok, well how about aiming for doing exceptionally well? The last inflation data was 2% at the bottom of their target and despite half of the data was bad they still don’t care.
Sorry I meant importers don’t pass on the ‘savings’ and keep the profit windfall from the high AUD.
Im always slightly bemused by commentators blaming politicians for the current economics conditions and also politicians taking credit for the strength of the economy.
Sure, in totally overt mismanagement situations they are to blame , Labor and Liberal certainly have historical exapmles of this.
However we are principally subject to the wims of the international money machine hence the current strong currency, which to state the bleeding obvious hurts exporters and assists importers. You can never have it both ways even if you are as big as China and try to manipulate it always comes back to bite you.
The best thing for Australia to do is to keep moving and adjusting its structure to compete. It has been one on the most succesful countries in the world in doing just that over the past 20 years both under a Liberal and Labor government.
What I always worry about is the politicians agenda that they have had in their “back pockets” since they were starry eyed youths. Unfortunately for us as a country wisdom often comes too late.
The fanatics from both sides are never called to account after they are relegated to the index of history and yet they destroy a life style that generations have built up. The damage of the Howard years is now eveident in certain areas and I’m afraid the damage of this government we will be evident far too soon.
Oh poor fella my country!