Strong employment

In a word, strong.  Not even a whiff of a rate cut here. I can’t remember when economics was this much fun.

Houses and Holes

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.

Latest posts by Houses and Holes (see all)

Comments

  1. Deus Forex Machina

    HH, it’s always this much fun. 🙂

    Unequivically strong number and traders have the AUD by the scruff of the next and are dragging it higher. 1.0477 at the moment – that first hour of European trade later today is going to be interesting. My guess is they’ll drive the battler higher again.

    • Actually, maybe not so strong…

      These are the seasonally adjusted numbers for the past 8 months. (Revisions after the –>). Note the huge revision down in January.

      Mar 2011: 11,457.1 –> ?
      Feb 2011: 11,412.9 –> 11,419.3
      Jan 2011: 11,441.5 –> 11,423.0
      Dec 2010: 11,417.4 –> 11,417.5
      Nov 2010: 11,416.9 –> 11,415.1
      Oct 2010: 11,355.9 –> 11,362.3
      Sep 2010: 11,326.2 –> 11 324.9
      Aug 2010: 11,272.0 –> 11,275.4

      The (unrevised) data is very noisy, and the ABS says with a 95% confidence interval the result for March (+37,800) could be anywhere from -16,800 to +92,400. Hilarious really given how much the media carries on about the monthly ups and downs.

      Looking at the numbers above, you’d have to say March was an outlier and likely to be revised down next month.

  2. In that case interest rates best either stay put or increase, housing prices should steadily increase…. No really!

    Knowing employees from CentreLink, MissionAustralia and few private employement agencies, I can confidently say (or believe) they forgot to place a ‘1’ in front of the 4.9%.

    On a more personal (and sad) note, careful what you believe about Australia’s Unemployment rate, a dear friend of mine decided to tell his boss to go stuff himself on the belief (or fact) unemployment is really low, and the economy is strong (and his boss was a complete [CENSORED!]), he’s still seeking employment, and blaming himself for some bizarre reasons like, “work force skills have changed, I need to catch up”.

    Just becarefull (not everyone, maybe many) if you want to quit your job without having something better for yourself in the pipeline.

    • Deus Forex Machina

      You are dead right on this…the headline numbers seem to mask the high level of under employment in the biggest employment sectors…mining is very tight, as is electricity and gas and finance all of which have under-employment below 3% according to ABS data released this week. But Retail, Accom and Food, Admin and Support services together with Arts and recreation are all over 15% under-employment.
      Its not as rosy as it looks sadly.

    • Is there an Australian equivalent of Shadowstats?

      Basically the unemployment figure is calculated via a survey of approximately 0.30% of civilians aged 15 years plus. It was the case in past years that individuals who worked even a small number of hours (when desirous of fulltime employment) were not counted as unemployed, nor were partners of couples seeking work if the other partner was employed. There were various other exclusions from being counted as unemployed. I’m sure other readers of this blog could advise of the current situation. If these exclusions are still in place, then obviously the unemployed number is considerably increased.

      Approximately one-third of the 800,000+ individuals on Disability benefits are moved there from Unemployment benefits and are in reality long-termed unemployed. Does anyone know the real story?

      • No don’t know the real story, just been told that the system of counting (or not counting) unemployed is shadey, and there are many questions you can ask regarding the methodolgy.

        Something I was told that if you were to take the number of people on sickness benefits, that are truely sick, substract it from the number of people on sickness benefits, and add that resulting number to the unemployment rate, it would significantly increase.

    • Two things in life.

      1. At some stage drive a car with the roof off on a winding ocean road, fast and with the music blearing (Eagles, Take it Easy or ZZTop, La Grange for me); and

      2. NEVER leave your job unless you have one to go to (or are financially independant).

  3. Botrot
    We are just a small family company. I advertised a position as a warehouse storeman last month (Brisbane) It’s not the most prestigious job and while we pay over the award it must be tough to live on. I’d have had well over 100 applications!
    Once upon a time i’d get 6…all unsuitable!

    • Deus Forex Machina and Flawse, absolutely yes to both of you. I can’t verify any of this with statistics and numbers (despite these being used to propagate this current rate), I and my (CentreLink and MissionAustralia)guests over many discussions on how the in and outs of what they do and see work can verify a high unemployment rate. Many people are receiving CentreLink (JobSearch or NewStart I think it called) assistance without being counted as unemployed, and one can receive these benefits for a while without being counted.

      First, count the 1 hour a weekers as unemployed, no these just aren’t the people that manage to scrape 1hr/wk of work, they are people that either have, worked before applying for CentreLink and have so many their work hours allocated over a period of time as 1hr/wk, also people that are already on CentreLink that manage to find a week or two of work, they also have certain amount of their work hours spead out over a period as 1hr/wk. In either case it may not be all hours they work. Not too long a go, this was the 4hr/weekers. It was reduced to 1hr/wk to bring down the unemployment rate. When you include the 1hr/wk, the rate increases quite high.

      Then define a line or a cut off separating the under-emp into two categories being, un-emp and truly under-emp. That is under-em people that are taking significantly more from the system than putting into it from their earnings in tax, So they are in effect receiving full benefit, but what can you do with that income and 3 kids anyway (terrible situation). You will receive so much in unemp-benefits, and the rest will be given to you under a different allowance name. Count them in as unemployed too and see the rate rise. Then there are truely under employed people that don’t earn enough to make ends meet, but CentreLink may give them $14 bucks a week or something, they’re under-em.

      I’ll add CentrLink don’t necessarily count the stats, they do do some stats for themselves, but also there are other Government Departments that do the counting, not just the ABS.

      Both people (from CentrLink and MissionAustralia) have told me the avalance of people requiring assistance pouring through their doors. And both put the unemployment rate from anywhere between 14-17% (, so do I but that’s me).

      And I also run a small business too, towards the end of 2009, I had weeks of work I required assistance with, quite correct Flawse, the amount of respondants I was inundated with, I just couldn’t pick anyone, even agencies begged me.

    • Agree on this. My company (small consultancy) advertised for a part time admin position – not glamorous.

      120 replies in 72 hours – then I took the ad down off seek. I expected about a third of that. So, anecdotally there still seems to be signficant underemployment.

      For balance, apparently on seek job seekers can auto submit job applications based on criteria they select, so that might come into it.

    • Gee that is horrible. Why they borrowed so much (or were approved for so much) is beyond me.

      • Yep – and that is why I am not enamoured with banks – they screw their clients and later their share holders.

    • Please correct me if the law has changed. My understanding is that the banks cannot touch your super if there is any shortfall from the sale of a foreclosed property. (Same deal with creditors in a bankruptcy.) If that is correct, this is merely facilitating more wealth transfer to the banks.

      Are these people informed of their rights before they are permitted (encouraged?) to tap their super to pay the mortgagee?

      It would make more sense to allow people to access their super after they lose the house (with no recourse to that money by banks) as a “start again” fund to help them begin to rebuild their lives.

      If banks can now access super in pursuit of repayment perhaps we should legalise assisted suicide so the banks can access life insurance policies as well.

      • I think the people are voluntarily accessing their Super under the “financial distress” type rules that exist for Super, in order that they can “just keep the house”.

        That’s what i would say is happening.

        • Hi BurbWatcher,

          I read it the same way – voluntary. I should have made that clear.

          If these folks tap their super and still lose their house it just makes their overall financial position worse. I’m guessing that someone taking a step like this is in extreme financial distress.

      • Anon, there are rules (by law) that enable you to access some or all your super, I know of two, one is mortgage stress, the other is 26 continuous weeks of CentreLink unemployment claims.

        I’m sure there are a few others too.

        • Unfortunately, none of the rules apply if you want to permanently emigrate. The money stays here…..

          And you think you “own” your super?

          • I know the super ain’t mine Prince (The). When someone demands a cut of the money, and says you can’t touch it, best kiss it off.

            What’s up Prince (The)? Sounds like you want bail the good flagship Australia, stay posted on this blog if you do, always look out for your posts, cool avatar too.

          • No I don’t want to bail, but its in the back of my mind and something I’m very concerned about. I’m still trying to convince Princess (The) for us to retire in NZ one day, or at least have a bach there!

            I contend that Australia will probably end up like Italy or Spain or Greece – not a bad thing (we have just as good, if not better beaches), in one way I guess. Again, I could retire/work in Italy in a heartbeat. Much cheaper living and better coffee to start with…

            The piccie was taken when I went to the Uffizi gallery in Florence last year (I could spend weeks in there). Its Niccolo Machiavelli, who wrote The Prince… tah dah.

            I’m slowly writing a post about super (might post today) which addresses the problems non-Baby Boomers face and how they are pretty much ignored by the financial industry (in favour of the Cashed Up Boomer).

  4. The company I work for has really struggled to keep up with the constant changes in IR laws. Changes from state to federal awards now see our staff forced into having a day off each fortnight and we have no financial capacity to take on new staff. Not all bad though, a little work life balance is good 🙂

  5. Adam Carr is getting very excited about a June hike now…

    http://www.businessspectator.com.au/bs.nsf/Article/jobs-employment-economy-CPI-interest-rates-pd20110407-FP546?OpenDocument&src=sph

    The bottom line for policy is that June is still live and markets continue to misprice the probability of a tightening at that meeting (0 per cent June, 17 per cent for August and 62 per cent by year-end). The unemployment rate is 4.9 per cent and that’s with the participation rate lifting. Consumer spending as a whole remains robust. If CPI out on April 27 spikes and other data points out between now and the June meeting (on June 7) show a similar rebound, then the RBA will really have no choice but to tighten again, despite the inevitable howls of protest such action would produce. Given the outlook, they don’t have a lot of wiggle room.

      • No, Adam is a permabull, and you’d have to say he’s been more right than wrong since early 2009.

    • It is very tough up here. Another electrical firm went bust last week….

      There is no construction going on.

      The biggest problem is the AUD, I’m sure.
      Of the overseas visitors that can afford to get here, I can’t imagine what they think of local prices.

  6. All propoganda. Take away the mining jobs and then what are the real unemployement numbers. The govt is making Australia look more glowing than it is. Everyone I am talking to says the job market is slow. I am in the recruitment business

    • And they managed to unseat a Prime Minister for trying to reallocate revenue from the boom to the rest of the economy! Not that he didn’t balls up the pitch, but the need still remains.

  7. LBS,

    How are you finding the construction recruitment market?

    The construction & engineering recruitment agency I work for had a horrible Q1

    • See this is what I don’t get. If all the jobs being created are mining and mining-related then you’d expect construction & engineering going gangbusters, but its not.

      Apart from mining funding lots of health and welfare workers, what’s the narrative here?

      • The misnomer here is that construction in housing, and construction in developing mines can easily switch.

        They can not. Mining construction is also the most cyclical, and voltile in terms of employment.

        It takes a hell of a lot of labour develop a mine, but once it is developed, it requires little labour. 2015 is supposed to be when worldwide supply catches up to demand, then it becomes likely a race to the bottom for spot prices will occur.

    • STC,

      The company I am with is majority focused on Mining. A few construction jobs but nothing like Mining. I couldnt give you an honest answer on that one. The mining side of it our company is going gangbusters.

      You know it would be really good to see the breakdown of the unemployment. I strongly believe you peel back the mining it would be a different result.

      Cheers,
      LBS