Tag Archives: labour market

Solid build up behind job losses

Though the loss of more than 31,000 full-time jobs in December 2013 has, not surprisingly, grabbed most attention, the Reserve Bank of Australia is possibly more interested in another set of numbers that came out today.

In a sign that low interest rates are having the desired effect, building activity is strengthening, improving 1.6 per cent in the September 2013 quarter to be up 5.4 per cent from a year earlier, according to the Australian Bureau of Statistics.

In the residential sector, new houses accounted for the majority of improvement – activity there was up more than 5 per cent from the September quarter 2012. This is on top of a significant 3 per cent upward revision in ABS estimates of dwelling commencements in the June 2013 quarter.

The improvement has also been reflected in measures of the value of all building work done, which rose above $21 billion in the September quarter for the first time in about two years.

The activity figures match RBA lending data, which show housing credit grew by 5 per cent in the year to last October.

Taken together, the results are adding to the pretty strong signal to the central bank that, notwithstanding December’s weak jobs numbers, it does not need to cut interest rates any further.

Before the release of the labour force data, markets had priced in a minor 7 per cent chance that the official cash rate would be lowered to 2.25 per cent at the RBA Board’s 4 February meeting.

Knee-jerk reaction might have pushed those odds a little higher since but it seems unlikely the unemployment reading will have unsettled the RBA, which anticipated the jobs market would soften through much of the coming year.

Instead, the on-going recovery in building work will have it pondering how much longer it should hold interest rates down at current levels.

Though inflation remains subdued, and talk of housing bubbles is (once again) exceedingly premature, household spending is clearly gathering some momentum. Retail sales are up, as are building approvals and home construction. Sure, job insecurity will be a not-insignificant handbrake on consumption.

But in the push and pull of economic forces, growth seems to be gaining ground, and the RBA is likely to view the 2.5 per cent cash rate as increasingly inappropriate.

 

 

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A shortage of jobs, but no shortage of work

In contemporary Australia there might be a (relative) shortage of jobs, but it seems there is no shortage of work.
While the unemployment rate hovers just below 6 per cent (it held steady at 5.7 per cent last month according to the latest official labour force figures), just about anyone with a job will tell you that their work demands are rising relentlessly.
So what is going on?
The latest official employment figures are consistent with a trend that emerged in the middle of last year in which employment growth is slowing but hours worked is accelerating (see Reserve Bank of Australia chart of labour input growth below).

10bl-labinpu

According to the Australian Bureau of Statistics, aggregate hours worked increased marginally in both trend and seasonally adjusted terms last month, while employment and unemployment were flat (a net 1100 jobs were created, while an additional 9000 job seekers joined the labour market).

The increase in pressure on those still with a job has been accentuated by the inclination of employers to take on part-timers over full-time staff – in the 12 months to October, 53,000 full-time jobs were lost, while during the same period 145,000 part-time positions were added.

Business surveys and the latest job ads report from the Australia and New Zealand Banking Group suggest wary employers are reluctant to take on extra staff.  According to the ANZ, the number of job ads has bottomed in the last two months after falling for most of the year, while an Australian Chamber of Commerce and Industry index of labour market conditions reached a four-year low of 43.6 points in the September quarter.

It is not hard to see why: though low interest rates have injected some vigour into the housing sector, the economy remains sluggish.

As RBA Governor Glenn Stevens observed earlier this week, the economy is still fumbling its way forward as the mining investment boom rapidly dissipates and other sources of growth are yet to establish themselves.

Couple this with the continued strength of the dollar and tepid global growth, and it is little wonder businesses are reluctant to take on extra staff.

Instead, as the data indicate, employers are choosing to use their existing workforce to cope with any increase in demand.

This is why those who have a job feel like they are working twice as hard, even as hundreds of thousands are banging on the door looking for employment.

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