Depressionberg Unstimulus smashes into labour market

Don’t say we didn’t warn you. From yesterday’s payrolls:

Did somebody lock down the economy again? No, the Depressionberg Unstimulus is busy gutting incomes for the vulnerable while boosting incomes for the rich with the end result being a giant demand hole that SME’s just crashed into. Add that they can now automate on the taxpayer’s dime so they are shredding headcount!

More from CBA’s excellent Gareth Aird:

Key Points:

  • ABS payroll jobs declined by 0.8% over the two weeks to 17 October following a 0.9% contraction in the prior two weeks.
  • We expect employment to fall by 50kin the October labour force survey, due 19 November.
  • The labour market data should improve over November and December.

According to the latest ABS data, total payroll jobs fell by 0.8% over the two weeks to 17 October. The 0.9% decline in payroll jobs over the previous fortnight means that over the four weeks to 17Octobertotal payrolls jobs have declined by a significant1.6%. Taken at face value this is both a bad and surprising result.

By state, the decline in payrolls was broad-based. There has been falls over the fortnight to 17 October in NSW (-1.3%), Vic (-0.4%), QLD (-0.6%), WA (-1.0%), SA (-0.3%), Tas (-0.9%), NT (-1.1%) and ACT (-0.6%). Indeed the fall in payrolls over the past four weeks has been significant in all states and has been particularly large in NSW (-2.2%). The contraction in payroll jobs in Victoria was expected given the various restrictions that have been in play until only very recently. But the decline in payroll jobs across the other states is surprising, particularly the magnitude of falls in the bigger states of NSW, QLD and WA.

It may be the case that the tapering of JobKeeper payments at the end of September has had a negative impact on the labour market. But our internal data that captures wages and salaries paid into CBA bank accounts does not support that hypothesis. In addition, while the number of CBA customers that are receiving the JobSeeker payment has inched a little higher in recent weeks, it has not risen by as much as the contraction in payrolls implies.

The payroll jobs by industry should add some colour, but again this is throwing up some unusual results. Over the past four weeks there have been big declines in payroll jobs in agriculture (-5.7%), construction (-4.7%), real estate (-2.7%) and professional services (-2.9%). It is not clear to us why jobs in some of these industries should have fallen so much over a short period.

Here we remind readers that ABS weekly payroll jobs are an experimental series presented in original terms. The data only dates back to January 2020 so we don’t have a historical time series to study potential seasonal patterns. The regular monthly labour force survey looks at the number of people employed which is different to the number of payroll jobs and we cannot simply extrapolate seasonal patterns between the series.

No mystery to me. JobSeeker rises with a lag. It’s the Depressionberg Unstimulus smashing into the labour market.

Houses and Holes
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  1. We are about to discover what quantity of jobs are reliant on business profitability. ie how much fat can be trimmed.

    • and how many of those businesses are sweating on having to sign off on their ‘This business is an ongoing economic entity’ statement ahead of the slotted return to normal solvency laws next March?

      I reckon Josh and ScoMo need either a December economic statement which introduces a range of shiny new spending measures (which would look like panic) or some form of Mini Budget circa next February or March to tide them over the year in a lead up to an election – assuming they dont get a chance to go early.

      ….or to suspend those solvency laws a big load longer

      • As discussed by the sector of ‘administrators/liquidators, the choice is between a trickle (sensible) and a tsunami of corporate failure. The latter will be a doom loop as pointed out by fitzroy that will be much more difficult to arrest.

      • “..ahead of the slotted return to normal solvency laws next March?” – which year? Banks and Gov will agree to push this until March 2025, why not? Banks can’t collapse now. Every time they run out of money they will issue bonds that our RBA will buy. To infinity and beyond.
        Isn’t same happening with bad home loans? How else are banks able to postpone people from selling their houses while not being able to service their loans?
        All Gov will be doing same so watch for price of gold and land to go to Mars not the moon.

    • I think the cashflow on Melbourne business will be drastically cut by the cashflow on other Melbourne business with a spiral downwards in employment and general deflationary pressures. Pulblic servants and Dan’s sponsors in construction will wonder what all the fuss is about until the developers go bust.

    • Mining BoganMEMBER

      That would be the wise thing, but this mob doesn’t believe in trickle up. Money should go directly to party donors. It’s in the bible or something.

  2. Another ill-thought out Gubmint scheme with grotesque consequences. Who could have seen this coming.

  3. I think my fridge may be failing and I am wondering what to do about it.

    I’ve got a thermometer handy, but perhaps I should delay taking a reading for a few more weeks. I’m most concerned about household confidence in the food.