Australia: Jobs Weak, Economy Booms, Rates Down

At the end of a big week for the Australian economy, there are definite signs the jobs market is going sour.

Growth is solid, especially in mining, construction, car sales, cafes and some parts of the services sector.

But after a long rebound from the losses in 2008-09, the jobs market has well and truly slowed almost to a halt.

In fact by a couple of measures in yesterday's ABS data, the number of people employed, especially full time, is lower than it was a year ago.

If unemployment is a lagging indicator as economists tell us, is the message from the labour market that conditions again worsened in November?

The Australian Bureau of Statistics said there was a net loss of 6,300 jobs in November, with the jobless rate rising to 5.3% (seasonally adjusted).

The loss of nearly 40,000 (39,900) full time jobs is a big hint, ( the largest loss of full time jobs since April of this year) as is the drop of more than 11 million hours in the number of hours worked last month.

But what then of the 33,600 part time jobs created last month?

Usually it's a sign of either employers cutting hours or days because they are not certain that the slowing in demand might last: the drop in the number of hours worked would tend to bear out that idea.

But a rise in part time work can also signal a rise in demand and employers cautious about how long that will last, so they gradually add part time workers.

But the fall in hours worked would mitigate again that as an explanation.

However, one thing is certain from the ABS data yesterday: job creation has slowed to a crawl in recent months and was just 0.4%, seasonally adjusted in the past year.

So unless there's a pick up in employment growth, there growth rate will go negative in the next couple of months.

There are now just 6,300 more people employed (11.463 million) than were employed in November of last year (11.457 million).

In trend terms there are 4,000 less.

The number of full time jobs has fallen 15,000 in the past year to 8.026 million people, but the number of part time jobs has risen 33,000 to 3.430 million.

Victoria, in particular, bears close watching. As our second biggest economy, it's going to have a big impact on employment in coming months.

In Victoria and Queensland, unemployment went up, off the back of falls in the participation rate -- not a good sign.

The Baillieu and Bligh governments have some explaining to do.

But unemployment remained steady in South Australia and Western Australia - and over in the west, the participation rate went up 0.5 points, a big rise even for that volatile indicator.

And encouragingly, unemployment fell again in NSW for the second month in a row, suggesting the O'Farrell government is finally getting the joint moving in Australia's biggest state economy which spent more than a year stagnating under the former Labour Government.

Seasonally adjusted unemployment rate state by state:

	Nov	Oct	A year ago
NSW	5.2%	5.3%	5.1%
Vic	5.5%	5.4 %	5.4%
Qld.	5.8%	5.7%	5.5%
SA	5.3%	5.3%	5.6%
WA	4.3%	4.3%	4.4%
Tas	6.0%	5.1%	5.4%
Aust.	5.3%	5.2%	5.2%

The AMP's Dr Shane Oliver says the latest jobs data "confirms that the jobs market is softening reflecting soft household demand and waning business confidence.

"Last year Australian jobs growth was a record 362,000 jobs as companies hired on the expectation of strong demand.

"In the event that demand has failed to eventuate and so jobs growth has slowed to a crawl and looks like it's starting to reverse as companies seek to cut costs.

"So far this year only 44,700 jobs have been created.

"The softening labour market is all consistent with the RBA's decision to cut interest rates and as the worsening jobs market adds to consumer uncertainty it supports the case for more rate cuts next year."

And the ANZ and NAB will pass on all 0.25% of Tuesday's rate cut to mortgages, and will start cutting deposit rates, which will mean lower income for millions of people from next week.

The Commonwealth Bank will follow suit with a full 0.25% cut and Westpac joined in.

See, it wasn't too hard, was it?