Roy Morgan unemployment rockets

Roy Morgan’s unemployment figures for January are out this afternoon and make worrying reading:

Unemployment was 10.3% (up 1.7% since December 2011) — an estimated 1,278,000 Australians were unemployed and looking for work. This is Australia’s highest ever number of unemployed as reported by Roy Morgan and is also Australia’s highest unemployment rate for a decade — since January 2002 (10.9% — 1,075,000).

A further 7.5% of the workforce* were working part-time looking for more work (underemployed) — 934,000 Australians.

In total a record 17.8% of the workforce, or 2.21 million Australians, were unemployed or underemployed.
The Australian workforce* in January was at a record high 12,429,000, up 383,000 since January 2011 — comprising 7,681,000 full-time workers (up 106,000); 3,470,000 part-time workers (down 53,000) and 1,278,000 looking for work (up 330,000).

The latest Roy Morgan unemployment estimate of 10.3% is now almost double the 5.2% currently quoted by the ABS for December 2011.

As you can see from the above chart, the Roy Morgan figures are unadjusted and more volatile than the ABS data. Nonetheless, the jump in January numbers is startling. Basically the RM figures are signalling a complete unwind of the mining boom era labour market.

You will no doubt also have noticed that the RM figures tend to lead the ABS figures by several months and that the current divergence between the two measures is unusually wide. Even if we can expect some give back in the RM figures next month, it’s hard not to conclude that a rather large spike isn’t also on the way in the official figures isn’t also in the offing.

More to come…


Houses and Holes


    • adelaide_economistMEMBER

      I don’t think so.

      It’s unadjusted, and January in particular is when huge numbers of people leave school and uni and start looking for work.

      You can sort of see (it’s not easy to read) on the chart that there is a massive spike every January.

      In this case, seasonal adjustment would make a lot of sense.

      • While it may be raw data, and there may be spikes in January, the January 2012 number is still a massive number relative to the previous numbers.

        With or without seasonal adjustment, that number doesn’t look pretty…

        • I would suggest it’s the “sorry, we tried to see what 2011 would be like, and, well…” lay-offs starting to come through…

          I’ve been-a-saying it for a little while now


      • I do think so.

        Despite statistical methodolgies and anomalies. From the ground level having previously assisted 3 organisations a few years ago, that is, 3 JobService Providers for CentreLink and DEEWR. The number of people from June 2008-July 2009, registering with any one of these JonServices Providers, has been hugely increasing monthly. That’s just the three I know of, in one area, there are more than 3 JSPs out there in many areas.

        This has overwhelmed these JSPs and CentreLink. Just before CentreLink started its’ report from home program, they [CentreLink] were instructing some (not all) recipients to report to them on either 6 or 12 week period. To take the load off them reorting face-to-face every fortnight.

        And looking at their own intakes, JSPs were by their numbers estimating (internally) unemployment at around 14%. That was 2009, and their applications for registration have been, and still are on the up and up.

        We’d giggle ourselves stupid if we knew just how the Government reported unemployment. I say we term ‘Official’ to ‘Bullshicial’ rate.

        Unemployment is not 5.x%, and I reckon Roy Morgan is being (not criticising) conservative. Commonsense should tell you that this is not an economy with 5.x%, not even 7.5% unemployment. Its’ more than that. December, January, School Leavers, Retiries, whatever.

        Also the recent news on Bank retrenchments, banks have been retrenching and outsourcing for the past few years, seems like its’ hitting the mainstream now, things must be on the downturn…. for the worse.

        That’s a ground view perspective.

        • dumb_non_economist

          +1, the official unemployment figures are as relevant as the RPData/APM weekly auction figures; pure fantasy!

        • adelaide_economistMEMBER

          Some interesting on the ground observations. BotRot.

          I would note though that the definition of unemployment has not changed recently, so unemployment by what we ‘know’ as unemployment is most definitely 5.x%.

          I get that by the layman’s concept of unemployment, the current definition is a bit dodgy and ideally the ABS would publish (like in the US) multiple measures – such as U3 and U6, where U6 is much closer to the Roy Morgan definition by including some portion of discouraged workers.

          It’s also worth noting that the media enjoys reporting ‘mass sackings’ but doesn’t report a multitude of small scale hirings also happening.

          That said, I have no beef with you over the fact that unemployment is clearly heading up. I would simply argue it’s not going up ‘that fast’.

          • No beef you either a_e, my reply-post did seem a bit dogmatic, sorry ’bout that chief.

            When our Government of Graciousness and Benevolence count and report unemployment the way they do, like 1 hour/week is not counted though benefits are still paid, and depending on what you tick on the CentreLink form determines whether one is counted as employed or not. And in 2009 one CentreLink employee told me, “welfare is a booming industry”.

            I’d say unemployement has been and still is on the up. It isn’t anywhere near 5.x%. Oh yes using the method currently used to estimate it, well statistics damn statistics.

          • BotRot:

            “depending on what you tick on the CentreLink form determines whether one is counted as employed or not”

            Oh dear. You clearly don’t know what you are talking about.


            ABS DOES publish multiple measures, albeit not very often. The underutilisation rate is published monthly. ABS also publishes (annually) the underemployment rate and the extended underutilisation rate.

    • +1

      Any optimism I was trying to hold on to for 2012 is not so slowly ebbing away – though to be honest that may well have been caused by reading some of Bob Wiedemer’s predictions for the US economy earlier this morning too..

  1. reusachtigeMEMBER

    It’s the emerging trend that matters. Surely the ABS official figures will soon have to follow in the same direction?

  2. HnH –

    1. What are the key differences in measurement criteria between ABS and RM?

    2. Why is ABS accepted as the official figure?

    3. Which do you think more accurate?


    • “Basically the RM figures are signalling a complete unwind of the mining boom era labour market”

      More like a complete unwinding of the credit boom era labour market…

      • “More like a complete unwinding of the credit boom era labour market”

        Yep. From my experience in Brisbane the CSG investment boom is keeping a lot of people employed. While the credit era boom – housing construction, retail, banking, property development, etc – is going backwards.

      • More like a complete unwinding of the credit boom era labour market…

        God you are so predictable. And you wonder why people think you a SpokesBot for the resources sector?

        How about: More like a complete unwinding of the idea that jobs lost in other sectors will be replaced by jobs in the mining sector. You know, the fairytale that Gittins et al have been spinning for more than 12 months now? It was never true, and it will never be true.

        So the credit boom era labour market is dead, on that we all agree.

        The mining-driven jobs boom never really happened. Sure it might have generated tens of thousands of new jobs, but never enough to offset the jobs lost in sectors devastated by the side-effects of the mining boom. i.e. the strong dollar. How can mining replace the millions of employed in manufacturing, tourism, education, and now finance? Answer: it can’t.

        IMO, this is evidence of the strong dollar labour market. The labour market where jobs are being shed in the sectors hurt by the strong dollar, much faster than sectors that benefit from the strong dollar or are unaffected by it.

        The Australian economy is eating itself alive. As long as you’ve got a job, Aussies can’t get enough of the cheap online shopping and the super cheap overseas holidays. Until now, virtually no-one has given a moments thought to the long-term implications for employment. Thankfully that is finally changing.

        As I’ve said many times here that we are destined to become a welfare state supported by mining income. You have countered that there is no evidence of rising unemployment in Australia. Well, just maybe this is the start of it.

        What say you MineBot?

        • The mining jobs boom is extremely narrow. I know a few former white-collar guys who now pour concrete and lay pipes and make decent money.

          As we keep saying, the girls from the perfume counter at Myer aren’t going to be snapped up by the miners. But a few of the housing construction trades, and other young fit men, are benefiting.

          The net effect is still obviously bad for the labour market, but it would currently be worse without mining investment.

          • Rumple:

            The mining boom and strong dollar are inextricably linked. You can’t have one without the other.

            Yes mining investment creates some jobs, but far more jobs are being lost in retail, manufacturing, tourism etc. That was the lesson from the 2011 employment numbers.

          • Lorax

            Mining investment creates many thousands of jobs in the construction phase and the flow-on effect to mining supply, geophysical, engineering, mining support, heavy machinery providers etc is considerable and to my mind unsatisfactorily quantified.

            We don’t know the absolute number of jobs lost to date (during Boom Mk II) in each of the sectors you list . Current official unemployment figures would indicate not many.

            Manufacturing has been gradually shedding jobs in real terms for years. Retail itself boomed during the credit spree and now will face challenges. Online threatens, but remains a small percentage of all purchases (and as some said the other day, the convenience or sourcing factor occasionally even trumps price). Financial services are feeling the pressure right now but again, not resources related.

            The real picture is more complex.


          • MineBot:

            If mining and mining investment creates all these jobs, but Australia lost jobs during 2011, it stands to reason that more jobs were lost in non-mining sectors than mining sectors.

            The credit boom ended in 2008, but jobs growth continued through 2009 and 2010, and then came to an abrupt halt in 2011.

            What was different in 2011? A very strong currency.

            Look, we can go over this again and again, but its clear that high resources prices and a strong currency results in a very narrow boom that benefits relatively few. Weaker resources prices and a weaker currency results in much more diverse economic activity which benefits more.

            I remember the early 2000s. I remember broad economic activity. I remember a recovering manufacturing sector. I don’t remember a recession or high unemployment because our terms-of-trade were weak.

            Now I’m not saying we can do much to lower commodity prices and the dollar, just don’t tell me its a good thing! And don’t tell me that things would be much worse without the jobs that mining is generating. Mining booms go hand-in-hand with a strong currency and all the negatives that flow from that.

          • Lorax, we go round in circles.

            – In percentage terms not many jobs were lost in 2011, if we are to trust the ABS. What numbers can be directly attributed to the strong dollar only?

            – Employment ‘came to an abrupt halt in 2011’. Yes, 2011 was a volatile year in credit markets, many economies dipping into recession, but not Australia. Alas the credit chickens may come home to roost.

            – Yes the dollar was strong. Tourism and education sectors impacted by BOTH the strong AUD and recessionary conditions/cautionary outlook.

            – Manufacturing continued to struggle.

            – You don’t need to look back to the early 2000s to see broad economic activity, it still exists but it is not immune from a range of normal economic pressures particularly the feedback referred to elsewhere in this thread. The currency is one other factor, one the favors some sectors and burdens others.

            – Management of the currency is responsibility of the central bank and government.

            I am not saying that I personally think the high currency a good thing, but I am saying that to many it is not all bad.

            Like many other developed nations, the end of credit fuelled speculation and consumption will be the most difficult challenge to face – and we are unlikely to be immune from its windback.

            ps Out of interest, why do you think the RBA/Government has not intervened in the currency?

          • I kind of, agree with 3d1k (shock, horro).
            The blame for the sad state of affair squarely rests with the Treasury and RBA.
            It was Amatuer Hour at both these establishments, with their “2-speed economy” and the “making room for the mining boom” narrative.
            Well, these numpties didn’t and don’t realize that 2-speed economy already has a name – Dutch Disease – and FFS, you don’t make room for it to grow!

        • Very quickly:

          1. I never bought the ‘jobs will be absorbed in mining’ narrative. You shouldn’t have either.

          2. Finance is not a victim of the high AUD, rather the downturn in financing activity and increased cost of funding, both a product of the end of the credit era.

          3. Any major fallout will be directly attributable to the end of the credit era, some sectors further impacted by high AUD. Many other developed economies are already well into the mire of recession – with no resources sector or strong currency to blame. Repeat, it is the end of the credit era that will cause the most damage, perhaps even eventually to the resources sector itself if China cannot cope with the falloff in demand for manufactured product.

          4. I have said that to date (not this date) there had been minimal evidence of rising unemployment. This appears to be changing but in official figures remains modest. I have countered your assertion that the resources boom had resulted in one million newly unemployed. Nonsense.

          Repeat. The major cause of any economic decline in Australia will be fallout from the end of the credit era. Few other developed economies have escaped it. Indeed, neither may we.

          • Lorax, one other small point on the strong AUD. Talk to people and see what they think – most love it for the reasons you list above: online purchases, o/s hols, cheaper big screens and computers (almost cheaper anything from o/s) and that important one in household budgets, fuel costs. In addition, there seems some psychological delight in the strong dollar – strong dollar=strong Australia. Many might pay lip service to concerns for the automotive and tourist industries…but they vote with their hip pocket!

          • I have to say that I agree 100% with 3d1K. If Australia didn’t have the mining boom, our unemployment would be far higher than it is and the fallout from the credit boom would be much worse. Let’s at least be thankful that the mining boom is allowing us to deleverage in a less painful manner than has been experienced in many other nations, simply because our aggregate incomes have been rising (not falling).

            This is not to say that we couldn’t have managed the boom better.

          • UE:

            Putting aside the end of the credit boom (which we all agree is a big contributor to economic weakness) and only look at the net effect of the mining boom and strong dollar, I would suggest that the net effect on unemployment is now negative. Surely 2011 proved that.

            i.e. the mining boom and strong dollar is destroying more jobs than its creating.

            Note: The MineBot will suggest the strong dollar has nothing to do with the mining boom, but everyone knows this is nonsense.

          • MineBot:

            I agree that most people love the strong dollar. I’m sure Toyota and Holden workers loved the strong dollar right up until the moment they were laid off.

            I’m sure salespeople at Harvey Norman love going to Bali and Europe and having more spending power.

            I’m sure there are tourism operators who like having cheaper petrol than they otherwise would.

            This is the great paradox of the Australian economy. We love what’s destroying us. As I said, we are eating ourselves alive.

          • Lorax, I don’t suggest the high dollar has nothing to do with the mining boom, I suggest it is not the responsibility of the resources sector – rather it is the responsibility (in fact preferred position) of the RBA/Government.

            It is their role to supervise the currency and effect stabilisation measures if deemed appropriate. Obviously they do not consider it so!

          • I don’t like to see anyone made unemployed but pulling at the heartstrings here on the basis of the AUD does not quite work – how do you explain job losses in most every other developed economy, losses that dwarf our own (most fortunately).

          • 3d1k you make some good points. But you add manafacturing, service, retail, tourism jobs to the mining jobs then those are by far the ones the govt should be looking for. Plus this mining boom is all on the China story which lets face it anyone on here who thinks China is going to boom forever seriously has some rocks in their head. The high dollar is eating the inner job market alive like Lorax says. There needs to be more of a balance here. I think the dollar needs to be somewhere between .70 – .85 . When the mining boom is over and the other job markets are screwed lets see where GDP and HOusing goes.

        • I would wager that a good part of the lay-oofs is the strong dollar, but that it is actually the (currently slow) unwinding of the housing credit/market that is doing the lion’s share of the damage.

          As I said in an above post, it’s “The Problem of Structure” – and we have a nation-wide, 20+-year, mega-structure built around property … it’s a giant, a Godzilla, and it is unwinding, and the attachments (such as employment) are coming off with it.

          My 2c

      • +1

        As far as I can see, the big growth surge of the 00’s was heavily driven by the biggest surge in private sector credit growth in history. With this now unwinding……

    • The Sacked Wiggle

      1. My guess: The ABS records you as employed if you work one hour a week. RM presumably uses a more credible benchmark, hence the higher number from their survey.

      2. thems the guvverment

      3. possibly none of the above but given how being employed is defined you’d have to reckon that the ABS understates unemployment.

      • reusachtigeMEMBER

        No, you are totally onto it. You’ve got to jump through hoops, and wave your hands while you are at it, to be declared unemployed by the gubbermint.

        • Thats how they lower the number…they notice all that jumping and waving, reclassify you as a fitness trainer and then claim that all that juming and waving is actually a workout!

          Bingo you have a job.

    • 3d1k. Bill Mitchell has a great explanation of the differences between the Roy Morgan measure and the ABS measure (see here). According to Mitchell:

      “The following Table captures the essential differences between the Roy Morgan measure of unemployment and the ABS official measure. You can see that the real difference is that the former do not apply an activity test as strictly as the ABS and thus include a number of workers which we might consider to be “hidden unemployed” as per the previous discussion.

      The Roy Morgan method asks whether the person who is “not employed if they are actually looking for a paid job (regardless of whether they’ve looked in the last four weeks)” and so they include the ABS official unemployed plus some estimate of the hidden unemployed although we cannot be certain whether any of these “additional” workers would be ready to start work immediately.”

      Mitchell also provides this table summarising the key differences.

      In summary, the Roy Morgan measure is broader than the ABS’ and, as such, is consistently higher. Neither is necessarily right or wrong – they just measure different things.

      • Lol: “Neither is necessarily right or wrong – they just measure different things.”

        but which one measures unemployment!

        • Bill Mitchell: “The broad rule of thumb that economists such as me use to provide an estimate of the state of the labour market is to double the official unemployment rate and then add some for hidden unemployment.”

        • Depends on how you would seriously and honestly define what constitutes employment, and govt fudging of the concept aside I think cultural and personal values come into that. I find it hard to believe that Germany would have the same official calculation of unemployment as Australia.

      • UE is there any reason that RM does not use the ABS method? It would be good to have a double check on the ABS.

  3. That’s a massive divergence between RM, and ABS. We really will need mining to employ almost everyone eventually 🙂 Julia has been saying more about non mining job creation, but where will they come from?

    • The Sacked Wiggle

      we just need more and more federal, state, and local government legislation which require more and more people to be employed in federal, state and local government to administer it. 100% employed in government is the end game given exponential increases in leglislation.

      • TSW, cynically I agree with you and it’s the EU model they seem to follow, but I did hear that they are downsizing some Canberra Dept’s, but that is to fill them all up again with the plethora of new green dept’s… I don’t have the numbers, but I can imagine it is so. Canberra is a bubble in any case.

        • Although as I think 3d1k noted in the white collar world many people get laid off only to be rehired as consultants earning more.

          As long as we get to 100% government employment eventually …either direct or indirect

      • We could start digging metro tunnels in our cities as quasi-mining government funded projects. Once we finish it we will have decent public transport and an army of well trained workers ready to get transferred to real mining jobs. It’s a win-win situation 🙂

      • Jumping jack flash

        oho… that sounds suspiciously like communism right there.

        government issued jobs for the sole purpose of employment?
        What’s next, government issued houses, food and clothing?

        In mother Russia, house owns you…

      • That sounds like Norway…

        Congratulations, you have now “done a Norway, turned your economy into one almost entirely dependent on resources and built a giant government bureaucracy to go with it. You also have plenty of asylum seekers with fake papers doing their best to get a permanent residency and insane property prices. You also have our “low unemployment” because 20% of the population is not counted as unemployed since they are not actively looking for work but rather live on the dole. You have graduated as a “rich” resource based economy!

        Now you can all live off of the sovereign wealth fund and enjoy your retirement! Oh, wait…

        • That should not read just “dole”, more like “govenment handouts” of various kinds, of which not all count as dole

  4. This is Australia’s highest ever number of unemployed as reported by Roy Morgan and is also Australia’s highest unemployment rate for a decade — since January 2002
    Gulp.. 🙁

  5. Arbitrarily tight fiscal settings, tight monetary settings, a high exchange rate, all-time low household demand for credit, rising household savings, a subsiding property/consumption bubble…and now the labour market takes – dare I say it – a Swan-dive.

    Two decades of borrow-and-splurge had to come unstuck one day…looks like the day has arrived.

  6. Looks like the next ABS print (January) is on 16th Feb. HnH, would you anticipate a surprise result (to the upside on unemployment) that soon?

      • Well something’s got to give. Visually extrapolating the above chart suggests a circa 1 percentage point rise in ABS unemployment in fairly short order (next few quarters).

  7. Using my own unofficial measure over the past 8 years of the extent to which builders’ quotes for work are a complete piss-take, I would say the tradies on the ground are getting more and more nervous.

  8. The only surprise is that it has taken such a long time to emerge. The current situation resembles the months before the GFC when I started seriously doubting my judgement while waiting for the STHTF. All the shares that I sold kept going up and I was getting some measly 6% from the cash deposit … and then it came down like a tone of bricks.

  9. In a couple of months the unemployment steamroller might just go over the top of GS at the RBA. His comment will be “Holy crap – didn’t see that one coming! Will I raise or lower interest rates? The mining boom is going on for ever – perhaps I’ll raise them. That will encourage more of the them to move to the Pilbara”

  10. Adam Carr strikes again with his worthwhile analysis on

    “ICAP senior economist Adam Carr said there is no economic reason for the RBA to cut the rate at the February board meeting, but it’s going to happen anyway.

    “I say that because even the RBA board acknowledged in December that there probably wasn’t really an economic justification to cut, they were doing it pre-emptively because of Europe but Europe has stabilised,” Mr Carr said.

    “The US economy has accelerated since then, Asian economic growth is strong and Europe has stabilised.”

  11. So guys, are you still sticking with the “slow melt in housing” prediction? Or are we going to see a feedback loop here?

    • Baldrick, it is possible that this is the beginning of a feedback loop, as I posted further up the thread other markets have shown that house price deflation leads unemployment.

      However, as UE says, it is too early to make such calls. If you haven’t already noticed we just like to take the a broad spectrum of data at face value and make predictions based on the trends. We are willing to change our opinion, but only if the data says we should.

      At presents I can’t see anything in the credit data to suggest there is an immediate upside to house prices compared to other investments, and this RM data, although preliminary, doesn’t provide any upside to support them either.

      However, as we saw in 2008, there is much the government can ( and will ) do in the event of a “major” correction in house prices. Whether those actions could be a as effective in 2012 is questionable given the rating agencies opinion of Australian banks, the cost of wholesale funding and the world’s sudden fascination with government surpluses, but that is another story.

      However, in the current environment you can still receive a fairly good return on your money by simply sticking it in a bank. But as always it is ultimately up to you to weigh up the opportunity/risks based on your own financial situation and risk appetite.

    • Baldrick, every other housing bubble crash (Spain, Ireland, USA) was purely feedback loop in its beginnings.

      No rising equity, no spending and borrowing against equity to spend.

    • My 2c.

      Coming down moderately fast – mining boom is helping; eventually significantly dropping (IMO) AUD will also help somewhat.

      But still a crash.

      And why?

      Because of structure: 2+ decades of structuring our economy around housing and housing credit growth means that we have Behemoth in the room and he is very, very influential nad very, very widespread; he is sick, everyone has a stake in him, indirectly or directly.

      As he unwinds, so will so much of our “old economy”.

      Structure can (and is) being reset, but it just not nearly fast enough and just not nearly widespread nor big enough – only another housing boom can replace it (enter govt……………………..oh dear, what on earth will they try and do……………!?!?!?!?)

      My 2c

      • ie. not external shock require, IMO – this Behemoth is sufficiently Ponzi in its structure (and, thus, significantly Ponzi-fies the the economy it makes up such a large part of), and will bring itself down all on its own-sweet-lonesome….and anything else attached to it, which is pretty much everything in OZ.


  12. I would have to assume that the figure has included the recent migration of new zealanders coming to Australia looking for work.

    I guess in a few months after not being entitled to unemployment benefits, Australia’s unemployment rate may drop slightly when they return back to NZ.

  13. Well I appreciate your need/desire to be cautious in your predictions, but this is the spike in the unemployment figures we’ve all been waiting for (and let’s face it we all knew unemployment was on the rise, and we were just waiting for the figures to reflect it).

    External shock – Greek default shocking enough for ya?

    The next battleground on the Oz housing front is obviously going to be Melbourne. Looks like a good chance of carnage there to me.

  14. gosh what a negative lot.


    1. those who might have entered the work force but were scared off by the GFC and so took up tertiary study have now graduated and are looking for work

    2. post quake(s) kiwis with families would have waited for the end of school before transferring to Aus (numbers yet to be determined)

    3. all those slimy-banking-sector-types-we-all-love-to-hate that have been laid off will have registered as unemployed (yes they have money but they are bankers duh – they can hide anything and entered the banking sector because of their ability to lie through their teeth 🙂

    4. the manufacturing sector is still in decline thanks to you scum bags that buy your stuff on line (oops, me too) and buy Jap cars and Chinese bikes

    5. the service sector associated with retail sales is in decline because everyone is buying on line (another oops)

    don’t you get it?

    these are all nobodies!

    who cares if they are unemployed!

    they should all have got degrees in geophysics when they had the chance – it’s not like it wasn’t obvious.



  15. What a lot of Macrobears you all are. And what a way to start the week-end.

    We have no problems in Oz. The unions and Labor guvmint will look after working familes, the rest of you can go to h… After all, all we need is Fair Work Australia to authorise massive salary increases, 12 months maternity/paternity leave etc, etc and we all join the unions/sheltered government workers and alls ok. Australia is different.

    Now go out spend and get [email protected]@ed, its the week-end.

    • After all, all we need is Fair Work Australia to authorise massive salary increases

      Look at wage distribution in the private sector by quintiles.

      Look at the wage increase the bottom 4 quintiles have gained since 2008.

      Then come back to MB and post an apology for foisting this type of nonsense.

  16. I would like to see an international comparison of unemployment methodologies before drawing any conclusion. The OECD or ILO might do something like that.

    If we can compare Australian “unemployment” on a like for like basis with Spain, Germany, US, etc, then we’re getting somewhere. Although I suppose differences in benefits mean it’s never going to be perfect.

  17. Lets drop the “devalue the currency” rhetoric.
    A weaker dollar may help a select few workers and stockholders in the (doomed anyway) manufacturing sector. But higher petrol bowser prices and other non-locally produced essential goods is just a drain on families and decreases discretionary spending. Not to mention making imported capital equipment investment less viable = lower worker productivity = lower wages increases = less discretionary spending again.

    The weak currency ‘easy solution’ is much harder than some people think.

    • Spot on – particularly when every other country wants to do it. Particularly the US and Europe, which then agitates China. It’s a race nobody can win.

      It’s all covered well in Jim Rickards’ book Currency Wars

  18. Sorry but I don’t agree.

    Any export oriented or import competing industry derives a net benefit from a weaker dollar. Off the top of my head I’d cite some of the following as being net beneficiaries:
    Manufacturing, tourism, education, non-food retail (with the advent of internet shopping and explosion of outbound tourism), mining, oil and gas extraction, agriculture, secondary processing (e.g. smelting, refining) and professional services (e.g. legal, accounting, scientific testing, IT).

    Fact of the matter is that the part of the economy that is ‘tradeable’ has increased over the years as regulatory barriers have fallen and technology has allowed for the provision of services from offshore locations.

    While higher energy imports are a negative the impacts of this are overstated. Only about 55% of the price of petrol at the bowser is represented by oil. By my calculations a fall in the AUDUSD cross rate to 80c would only increase the petrol pump price about 18% to the consumer. For a motorist with a car burning 10L per 100Km and doing 15,000km per year this would be equivalent to an increase of c$400 per annum (painful but manageable vs the other substantial cost of living increases).

    While the cost of imported capital equipment would go up the majority of businesses would gladly pay extra for equipment if it meant they weren’t being undercut on their production by cheaper imports. Also Australia still does make some capital equipment you know.

    The most obvious counter to your argument though is the fact that plenty of countries deliberately manipulate their currency (e.g. China) or artificially depress their wages (e.g. Germany) in order to improve their competitiveness and place their excess production capacity into other nations. That might have something to do with why those two are the world’s biggest exporters and current account surplus nations on earth.

  19. As someone working inside the mining boom and carefully watching the economy from that inside perspective, I can assure you that there are a LOT of people who owe their job to the requirements and benefits ( spending power) of those in the Mining Industry. However and obviously, that is no where near enough to offset the growing effects of;
    a) Consistantly strong Dollar = tourism shut down
    b) Deleveraging = Saving, not spending, cutting back in all areas of household outlays, shedding debt and being credit AVERSE.

    In effect, nett discrecionary spending is plunging and demand with it. That is why the non Mining sectors of the economy are caving. The response is , as we can see, Companies cutting back on jobs to meet the lower levels of demand. We are heading for a “new normal”.

    IMO, we are seeing the delayed effects of what has already occurred in Nth America and Europe.Our version being somewhat different due to the China factor and the FH Vendor Grant. Those conditions have passed.

    We are in for it now unless our Govt really opens the spending spigots to kick the can down the road. Will they?

    • “We are in for it now unless our Govt really opens the spending spigots to kick the can down the road. Will they?”

      Bank on Keynesianism occurring, and actually “working” from a very narrow, and arbitrarily-defined econo-accounting point of view…only a a few macro-indicators/figures “matter”…everything else is “not our fault – we stimulated, and, see, hey, it worked (according to what we care to measure)… la la la la la…”.

      I am telling the engineering consultancy i work for to be targetting “future” govt projects, as the country slows down, and even some mining project get delayed and cancelled.

  20. Enjoying the humour here. When you’ve done a bit of work to understand the basics, esp. that rapidly declining effective demand adds up to a slo-mo train wreck, you need the occasional chuckle at vacuous mainstream analyses.
    How can any true-blue Aussie dispute “she’ll be right mate”?

    Love this from today’s Daily Reckoning:
    “But don’t worry too much about all these worldly concerns. Our friends at the following institutions are working hard to solve the problems:

    International Monetary Fund, European Parliament, European Commission, World Bank, Bank of International Settlements, European Central Bank, Bundesbank, Reserve Bank of Australia, Bank of England, Federal Reserve, European Financial Stability Fund, Australian Prudential Regulation Authority, Australian Securities and Investments Commission, Financial Services Authority, Securities and Exchange Commission, Federal Deposit Insurance Corporation, International Swaps and Derivatives Association, Institute of International Finance, Financial Industry Regulatory Authority, World Trade Organisation, Organisation for Economic Cooperation and Development, Committee of European Securities Regulators , the Committee of European Banking Supervisors the Committee of European Insurance and Occupational Pensions Supervisors, the International Organization of Securities Commissions, the Basel Committee on Banking Supervision and, our personal favourite, the Plunge Protection Team.

    What could possibly go wrong?”