• The latest update of the Westpac Jobs Index reveals at first glance what appears to be a considerable dip in Australian business’ assessment of the labour market. However, at 50.0 the Aug reading of the Index is still consistent with average or trend employment growth.
• There are many business surveys out there and most have questions that are applicable to the labour market. To generate a broad and deep labour market indicator, Westpac compiles all the relevant indicators from these surveys into the proprietary Westpac Jobs Index.
• At 50.0 in Aug (it was 52.2 in Jul), the Jobs Index is now at the lowest level seen since Jul 2015. The most recent low in the index was 49.0 on Jun 2015.
• The Index is set so the long run average equals 50 and, as on average an economy tends to grow, a reading of 50 should represent trend employment growth. • Historically, the Index has to drop below 45 before it is associated with negative annual employment growth.
Not panic stations. The August PMIs were strangely weak as a group. Need to see more for confirmation.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
