A revision of February’s employment data and a big drop in employment in March has seen unemployment rise to 5.6%, but the economy is still well to the good this year in jobs, today’s employment data from the Australian Bureau of Statistics shows. Nonetheless, the “rate rise looms” crowd might have to make way for the “rate cut looms” mob for the moment.
After the surprise jump of more than 70,000 jobs in February, the latest labour force data from the ABS has produced a surprise on the downside, with a rise in the seasonally adjusted unemployment rate of 0.2 to 5.6%, and the loss of just over 36,000 full and part time jobs. But despite the fall in jobs, the number of jobs created in February was revised slightly up to 74,000 from the 71,500 that many analysts and economists found hard too believe because of changes in the ABS’s sample.
That means total employment is still 38,000 above January seasonally adjusted, which compares to no jobs growth between January and March of last year. But the number of hours worked also fell as 7,400 full time and 28.700 part time jobs were lost, according to the ABS estimates. That’s usually a sign of employer gloom about further sales and revenues (part time jobs seem to be the first to go before full time employees). It fits with the poor business conditions report for the month from the NAB on Tuesday.
Another worrying sign was the fall in the participation rate to 65.1% (down 0.2 percentage points). Market forecasts were for the loss of 7,500 jobs and a steady jobless rate of 5.4%. The rise in unemployment was led by NSW and Victoria: unemployment in NSW went from 5.3% to 5.5%, though with a small increase in participation; Victoria went further backwards, from 5.4% to 5.6% despite a small fall in participation. Queensland maintained its 5.9% unemployment, but participation fell 0.3%; WA edged up to 4.7% on a 0.4% fall in participation; South Australia was steady at 5.8%, and Tasmania saw a painful jump from 6.6% to 7.3% despite a half a percent fall in participation.
But on a trend basis (which attempt to smooth out the month to month ups and downs of the seasonally adjusted figures), the figures were much better. There was a rise in the number of people employed of 10,300, the jobless rate was steady on 5.5%, from a revised February rate (5.4% originally reported), a steady participation rate of 65.1% and a small increase in the number of hours worked, as there was in February.
The jobs report halted the dollar’s rise and it shed a quarter of a cent to fall back under $US1.05 as traders lifted hopes the Reserve Bank will cut rates soon. It won’t, it will wait and see what happens in the next couple of months, though it will be concerned by the resurgence in the dollar in recent days, which saw it peak at just under $US1.0550 this morning before the jobs data were released.
“Nonetheless, the ‘rate rise looms’ crowd might have to make way for the ‘rate cut looms’ mob for the moment.”
That re-emergence of a new upward movement by the dollar (the second or third in the past four months) brings it to within sight of the $US1.06 level reached earlier this year and last November. This latest rise wasn’t in the thinking of the RBA and Federal Government, but is now very much there thanks to turmoil in the Japanese government bond futures market in the past five days as traders wonder if the huge spending plans of the central bank and the government will boost interest rates too far too fast rather than gradually.
Expectations of a Japanese spending spree has helped boost the dollar, which also hit a 28 year high this week on a trade weighted basis. The euro hit a three year high against the yen this week and China’s current is now at an all time high against the US dollar, bond yields in the US, Europe (Spain, of all countries, has seen its 10 year yields hit near three year lows this week), Germany and Australia ease. But the surge in prices of five and 10 year bond futures in Japan this week (they have nearly doubled form 0.32% for the 10 year security, to 0.58% last night), have set off alarm bells about a wider sell off in Japanese bonds, which, if it ever happened, would shake financial markets globally.
Thanks for the summary. It’s difficult to reconcile with real life experience. I think the ABS definitions and geographic generalisations skew the data positively and should be moderated by other information before concluding there is no problem with demand for labour. It has long been the case but as long as employment rates are viewed only as indicators of likely mortgage interest rate cuts or increases, we’re unlikely to get any sensible analysis.