Australia’s record quarterly job losses

By Leith van Onselen

Last week’s ANZ Australian Economic Update provided some interesting analysis of the quarterly labour force statistics, released last week by the ABS.

The ANZ Update showed a labour market that is deteriorating, with job losses starting to mount, especially in the construction and public sectors. After examining the data myself, which is presented on a non-seasonally adjusted basis, I was surprised to discover that Australia recorded a record number of job losses in the August quarter, with total employment contracting by -135,500 over the quarter (see red bar below).

In raw number terms, job losses were particularly high in construction, agriculture and the public service:

Whereas in raw percentage terms, losses were highest in agriculture, real estate and utilities:

Interestingly, the mining sector, which has led job creation over the past year (click to see chart), actually lost -4,600 jobs in the August quarter, with job losses concentrated in the coal industry.

On a capital city basis, actual job losses were highest in Melbourne, Sydney and Adelaide, whereas Perth, Darwin and Canberra bucked the trend:

However, in percentage terms, Hobart and Adelaide experienced the biggest job losses, whereas Darwin experienced strong jobs growth:

Overall, the Australian employment situation appears to be deteriorating. The recent driver of employment – the mining industry – has begun contracting amid falling commodity prices and cancelled mining investments. And the situation is being made worse by the sharp downturn in housing construction, which is crimping construction jobs, as well as government austerity measures, which are reducing public sector employment.

Twitter: Leith van Onselen. Leith is the Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. Click for a free 21 day trial.

Comments

  1. No doubt anything the ABS releases such as employment, car sales data etc. can be seasonaly adjusted into more favorable figures to maintain ‘confidence’.

    • Indeed. As someone entering the medical profession next year, I can tell you that that surge in healthcare jobs is due in large part to the appointments of various levels of junior doctors which were finalised in the August quarter for the whole country but won’t take effect (in terms of salaries being earned and spent in the shops) until January 2013. This is not just the several thousand interns (i.e. first year out) but all the various Registrar ranks which shuffle up the ladder each year. In short a lot of positions that are ‘created’ in the middle of each year, but not ‘lost’ until 6 months later. A fruitful area for massaging the numbers if ever there was one …

      • As someone who worked for the federal government’s Employment and Education department, I can tell you that all labour market programs and schemes are only there to shuffle people off the unemployment register. I heard that from the minister of the time directly.

      • Thanks for that info R2M.

        More evidence, as if any was needed, that hundreds of millions in taxpayer earnings are being wasted to produce essentially a misleading picture of our economic status.

  2. Those job loss figures in agriculture are particularly concerning, in light of longer term / Big Picture concerns that the high / unprotected AUD policy etc are undermining our productive base. Recognise that these are not seasonally adjusted figures, so would be eager to discover just how bad the agricultural employment situation actually is.

    I know MB generally places more emphasis on mining, RE, and manufacturing. But would be valuable and appreciated if an increased emphasis could be placed on ag … that is, emphasis other than bagging out BJ for the terrible crime of wanting to keep Aussie agriculture in Aussie hands.

    • Yes Op8. I looked at the figures for Ag and decided that it was some sort of error. The numbers for a quarter are simply astounding and, on both an equity and efficiency basis, should have every economist, every politician, every do-gooder and social worker in the country calling for a halt in this destruction and a full scale enquiry as to why it is happening. Of course what we get is total silence from an urban based community that doesn’t care about anything else but its own short term indulgence.
      The long term and ongoing destruction of rural Australia in both economic and social terms is gathering new pace it seems.

    • You need to be careful drawing big conclusions when you look at non-seasonally adjusted numbers for only one quarter, particularly in an area where work is volatile, like agriculture. The annual job figures for ag tell a different story.

      • DavoJ…I’m a refugee from the Ag industry so i’m pretty (over?)sensitive to the way the whole of rural Aus has been treated.

        What happened in this quarter last year? I had a quick look but could not readily see the data

  3. reusachtigeMEMBER

    I’d say that a lot of people who started losing jobs months ago are only now just starting to appear in the figures as they exhaust their savings and have to do the unthinkable – join the officially jobless. Sydney’s Financial Services job losses are a good example of this and may still have a way to go before they all get on the queue.

    • Roberto G over at BS was saying the exact same thing today in his article. Believes we’re going to have a big wave come 2013 when the real jobless finally put their hands up and admit their plight.

      Probably shortly after they get back from summer holidays on the coast in February is my guess and they’ve cleaned the bank account out and the school fees are still due.

    • I would have thought anyone who lost their job months ago and were part of the survey would have declared themselves unemployed regardless of whether they were living off a redundancy or not. The Centrelink queue doesn’t come into the calculation.

      It is a little perplexing that’s for sure. Everyone’s calling the gloomy tune (myself included), yet car sales and air travel are still breaking new records, housing’s still ridiculously expensive and the official UE number supports the case that things may not be as bad as we think. How much of this is the vested interests and rent seekers looking for a little more stimulation?

      • Perhaps the old personal pride is preventing people from admitting they are unemployed. Not wanting to appear an outcast (unemployed) in their social groups and the stigma that may come with it.

      • Especially if you have 2 investment properties and kept telling everyone how you are in complete control of your very leveraged financial situation and going to retire in 10 years time when equity doubles.

  4. I follow the monthly ABS employment reports and I’m often surprised at the dramatic difference between the original and seasonally adjusted data. Take the August employment report – a shocker when you look at original data. But this is really about the employment situation in Aus. To help provide some clarity, I’ve started to look at unemployment benefits. Adjusted for CPI, we’ve hit new highs. The employment trends over the longer term look weaker as well.

  5. LVO,
    Being pedantic, shouldn’t the word “Thousands” (on charts 2 and 4) sit under the horizontal axis?

  6. Aussie Contrarian

    Our unemployment rate is still very low. On top of that, house prices have been rising for nearly four months – the RPData index has risen 2.2% since late May and is on a clear rising trend. If this keeps up we’re looking at 7% annualised growth and prices (nationally) back to 2010 peak levels next year. Sydney currently sitting just 2.5% below 2010 peak.

    Iron ore prices marching back up, car sales at record highs. All this before QE3 takes effect, and interest rates probably going down a bit more.

    Woohoo! Boom times could be back baby!

      • I reckon he might be if doom and gloom now holds the firm majority across the community. The media seem to have jumped on the bandwagon, despite some of the data he speaks of.

      • Aussie Contrarian

        @DrBob127 “You don’t sound like much of a contrarian”

        A contrarian is one who takes an opposing view to the prevailing view. I think the prevailing view on MacroBusiness is one of doom, gloom, and falling house prices. How am I not a contrarian if I take an opposing view to the dominant one here?

        Am I right in assuming you conform to the prevailing doom and gloom view here?

      • Ah, so you’re actually ‘MB Contrarian’ rather than ‘Aussie Contrarian’ since what you originally posted didn’t seem to be very different from what (it seems like) the majority of Aussies think.

        Thank you so much for defining what a contrarian is though.

        As for ‘conforming’ to the ‘doom and gloom’. I do understand that the world is headed for a period of debt deflation as the global credit binge is unwound.

        Mame of that what you will.

      • Aussie Contrarian

        The world has been in debt deflation since 2008. But we need to be realistic rather than pessimistic. Clearly something is ‘different’ in Australia, compared to the rest of the world.

      • so how does being “realistic rather than pessimistic” sit with the statement “Woohoo! Boom times could be back baby”?

      • The real unemployment(not ABS) in this country is going to be much higher in 6~12 months time.So how is the so called uptrend in house prices going to be maintained?Maybe you would care to explain what are the factors that make Australia different from Ireland,US or Spain etc..

    • Classic spruiking (or just trolling?) from Aussie Contrarian.

      Nonetheless I will respond. Here’s the article you are looking for, AC:

      http://www.macrobusiness.com.au/2012/08/rp-data-home-prices-flat-in-august/

      “After home values nationally rose by 0.97% in June and by 0.55% in July, on the back of the -0.5% cut to mortgage interest rates over May and June, price momentum has faded in August.

      Nationally, capital city home prices are down -6.0% since home prices peaked in October 2010, with losses recorded across all of Australia’s capitals.”

      • Aussie Contrarian

        Ah, the old “anyone who I disagree with must be a troll or spruiker” meme. How original.

        Yes August was flat, but we’re well into September now and prices have been rising strongly through September (check the daily index). So we’re at almost four months of prices on a rising trend. As I said, we’re currently just over 2.2% above the May lows, and September has been up solidly.

  7. DE, judging by a number of comments on this thread and on previous posts dealing with ABS statistics, it seems to me that it would be a good idea to run a series of posts explaining how the statistics are derived, their limitations and possible errors, and how to interpret them.

    I expect the same sort of misguided comments will still crop up (although with any luck less frequently), but when they do it will be straightforward to point people to a place where they can gain some understanding of ABS methods and the resulting statistics.

    • +1 (Although I think you should be directing your suggestion to Leith)
      A basic understanding of the ABS methodology should be a prerequisite to commenting on these UnEmp threads.
      A secondary benefit would be diseminating more widely the ABS methodology and maybe even improving the debate in the MSM.(which is something we all want)

  8. How come accommodation is barely employing?

    The Master Chefs just said they are desperately looking for people!

    http://www.news.com.au/national/celebrity-chefs-say-locals-dont-want-to-clean-fish-or-peel-onions-in-the-kitchen/story-fndo4cq1-1226476110491

    Note as well that they want to “import” (their expression, not mine) foreign workers on lower wages and worse conditions, because the rates they pay are excessively high!

    And you can see in the link how high those rates are, too: from $9/hour the 1st year apprentice.