Unemployment surges to 12-year high

The ABS has just released its unemployment estimate for January, which registered a large seasonally adjusted lift to 6.4% from 6.1% in December:

ScreenHunter_6019 Feb. 12 11.32

The more reliable trend estimate was flat, however, at 6.3%, although it was revised up from 6.2%.

Total employment decreased in seasonal adjusted terms by 12,200 to 11,668,700, with full-time employment decreasing 28,100 to 8,078,000, partly offset by a 15,900 increase in part-time employment to 3,590,700.

The participation rate remained steady at 64.8%. And, on a more positive note, aggregate monthly hours worked increased 8.2 million hours (0.5%) to 1 ,607.6 million hours.

The headline result disappointed analysts, who had expected the economy to add 7,500 jobs in the month, with unemployment forecast to rise to only 6.2%.

I’ll be back shortly with my usual detailed report.

Unconventional Economist


      • But I have a great idea that will save the day! Negative interest rates.

        In my new scheme that I have spent more time contemplating than Joe ‘the slug’ Hockey (1 minute) thought about anything he has ever said.

        Negative interest means … that if you have borrowed say 1 million dollars at the SNB negative rate then you get a $75,000 dollar dividend each year.

        Good for business even better for re-elcetion

  1. ABS is becoming a joke. Or the companies are hiring and firing people every month. I.e. one month they hire and the next month they fire!

    Trend is a better indicator to follow. Sadly it is pointing up


      • I wouldn’t count on any housing price correction until we correct our supply policies especially not for Sydney. Look at the Sydney housing construction data in the naughties you’ll see it dived because land developers just decided to sit on their undeveloped land…which turned out to be a genus decision …for them!

        Now flush with cash from recent full-price developments their not likely to want to dump their un-developed land at a discount at ANY time in the near future …this takes us straight back to a dead-lock situation where would be house builders cant afford the base land and consumers cant afford the developed properties but land developers can afford to just sit and wait.

        What we need is a ballesy NSW govt to release serious amounts of pre approved residential land and unmercifully crush land speculators ….Ask yourself..is that going to happen? not in the short term (budget reasons) and not in the long term (even more serious budget reasons) never mind the vested political interests.

      • A very hefty LVT targetted at land bankers needs to be implemented. If construction hasn’t commenced with 24 months and/or isn’t running to a reasonable schedule of completion then tax the sh!t out of the developer. Fair and reasonable.

      • @Andy!

        Don’t the Chinese have a kind of ‘use it or lose it’ policy – if there’s not sufficient progress after 12 months, they confiscate the land? Maybe that could work.

      • It does for the victims of cheerleading who buy at the peak… I mean at the permanently high plateau.

      • Choice aside, that’s the risk one takes by buying, or not. Accountability for actions rests with the individual. Do you actually believe that house prices should never fall below what one pays, and if that were to happen then that person becomes a victim (of the market)?

    • Deary me tmarsh, are you suggesting that we have some sympathy for specufestors?

      I do feel bad for those bought recently, have very large leverage, live in their properties and have trouble keeping their incomes steady.

      I don’t give a faaaaark about investors.

    • @ tmarsh

      So will my daughter & her family, and many others who’s only “crime” was to want a home to grow their children in.

      • As long as she didn’t over borrow and doesn’t need to sell for more than she bought there is no problem. Paper value stuff.

      • “So will my daughter & her family, and many others who’s only “crime” was to want a home to grow their children in.”

        Yeah, it’s a pretty basic and understandable desire. It’s a shame we’ve turned a basic need into such a ridiculous circus.

    • No tmarsh it works the other way.

      Poor economic data means that interest rates MUST come down.

      Therefore, financial assets will increase in value.

      Those silly unemployed were probably renting anyway.

      Now is looking like a better time than ever to invest in real estate given that rates are set to look favourable for a long time.

      • @melbourneguy “rates are set to look favourable for a long time”

        With the LNP now running a $56billion black hole budget and likely to get worse, US interest rates rising and A$ falling it doesn’t take much of a leap to see a spike in rates sooner rather than later.

        With WA, ACT and SA property already starting to decline on lower income and outlook, Syd and Mel will likely follow – my tip is the waters will breach in 2017

      • I’m with you on 2017. Previous mining boom/busts and their relationship to house prices point to that.

  2. Thank God they lowered interest rates – immediately raised confidence, reduced unemployment, increased consumption and growth and because we were ASSURED there was macro-prudential no surge in SYdney prices.

    Awesome work.

  3. Do not even look at the seasonally adjusted estimates. The confidence intervals are huge! The trend estimate was unchanged. That’s all we can really ready from this.

    • Actually the trend estimate has risen 0.1% comparing today’s release with the release published in January. They just changed the goal posts a little.

      Also, if we look at how things went over twelve months we can cut out some of the noise, viz –

      from the trend estimate there are an additional 65,000 unemployed people, or an increase of just over 5000 per month.

  4. Abbott and Hockey, Joint Ministers for Unemployment.

    Six months and they’ll be gone. No cabinet solidarity next time. The risks to the seats of the creme de la creme of the party will be too high.

    Backbenchers now realise that for professional politicians in safe seats (normally Ministers and parliamentary secretaries and committee chairs) backbenchers are largely dispensable fodder to feed ideology every second or thrid election, but there is not much they can do about it.

    Abbott’s only hope is 2 smooth years pleasing middle Australia rather than the 1%. Rising unemployment won’t do the trick.

    Watch this next budget, it either reverts to middle class expectations (economic and social) and abandons anything deemed offensive or
    1.Abbott and Hockey are for the chop, or
    2. all his marginal seat holders are for the chop, or
    3. both 1 and 2 above.

    • Just a reminder – on the eve of the glorious revolution, September ’13, UE was 5.7% (trend) and there were 706k unemployed.

      The trend change doesn’t seem to have been all that volatile, it just ticks up 0.1% every second or third month, and looks set to keep ticking up for some time to come.

      Do the 76k new unemployed (and their partners) live in marginal electorates?

  5. Reading the unempleyment print, Gerard Minack’s words are ringing in my ears … “The main reason I do not yet have recession as a base case is that leading indicators of employment appear reasonable. If the employment leading indicators turn lower, then the risk of recession would commensurately increase.”

    • Increasing house prices are “flatlining” and unchanged trend UE is “surging”, Acme. You have to embrace the hyperbolic crashnik narrative.

  6. This has all the hallmarks now of a serious property crash beginning within weeks. If people can’t find work, how the hell are they meant to service their loans? Widespread unemployment across society means widespread defaults on mortgages. Glad my money’s in the bank. All those fools who bought houses over the last few years are about to suffer massive negative equity. I’m ready to grab a bargain.

    • They’ll capitalise interest from their “equity mate”, banks will be swarmed with hardship provisions limiting cashflow, dividends will be slashed…

      In terms of price, a fair value is around 40-50% discount to current prices (SE Melbourne) and a bargain would be anywhere below that.

      • I think we’ll see prices fall harder than that in some areas. My base case is a 60% fall in Melbourne property on average. Tony Abbott is the best possible PM one could hope for if needing cheaper property. Nobody can destroy a nation’s economy like Abbott and Hockey. They are a gift to us!

    • “Glad my money’s in the bank.”

      Do you mean the bank that is going to take your money to recapitalise itself? 🙂

  7. Luckily based on current Govt policy we are forecasting to bring in another 500,000 people each year over the next 3 years – with a net inward migration of 250,000


    Funny how of the 300,000 temporary visas issued only 100,000 return home (ie working holiday visas)

    At what point will the Govt conclude that with weak employment growth and strong economic headwinds its time to “stop the planes”?

    There is a growing army of very resentful and angry unemployed / underemployed Australians.

    Time to put aside the political correctness and have a real debate on this issue.

    • “Time to put aside the political correctness and have a real debate on this issue.”

      How does political correctness come into this? There is nothing wrong with debating government policy and business activities (especially parasitic activities) as long as we don’t unnecessarily demonize overseas workers (who are just looking to eke out a living).

      • I agree RobW – trouble is whenever anyone raises the question about immigration levels they get branded a racist.

        That is unless it’s prefaced with a “stop the boats” slogan.

      • +1 stomper.

        Very difficult to get a sensible discussion going on migration levels, as someone invariably pulls the ‘race card’ to shut down discussion. Unfortunately I believe this is because quite a few actual racists try to cloak their racist intent behind discussions on sustainable population levels. The whole illegal immigrant thing has been a fantastic distraction that allowed Howard, and every govt since, to crank the rate right up.

        But I still think it’s an issue worth pursuing given the effect rapid population growth, in the absence of commensurate infrastructure spending, is having on quality of life.

      • I agree RobW – trouble is whenever anyone raises the question about immigration levels they get branded a racist.

        That’s because 99% of the time when someone raises a “question” about immigration levels, they’re fearmongering about scary, brown. muslim, boat people.

    • Mining BoganMEMBER

      Yeah, bloody soap-dodging hipsters in their stupid wicked vans.

      That’s the real problem.

  8. Consumer debt levels in Australia are approaching 2 trillion dollars (mostly mortgage debt). If for arguments sake you divide that by the approx 8 million with full-time jobs you get a result of $250k per person.

    With unemployment trending up, our debt fuelled ponzi-like model of economic growth must surely be near endgame.

  9. NZ’s unemployment rate jumped from 5.4% from Nov to 5.7% in Feb…

    Popping up housing price so as to increase the construction work and knock down unemployment rate is just short- lived…Wealth effect theory is working on the condition that the housing is undervalue… Considering house price is much lower in NZ than OZ before their easing money policy, OZ now is in a very dangerous shape…

    RBA should learn the lesson…

    Back to 2007 GFC, can FRB save the housing market? US house price was around 300K or 4.6 times of household income before it crashed…personally I believe FRB can defer the housing bubble burst…however they choose to let it go and come back with a healthy and strong economy…and they do. And it takes 6 years…
    Australia…is different..for the bubble to burst, the earlier, the better