• In December, employment fell by 3,800 jobs, not 5,500 as previously reported. Economists had expected a 5,000 lift in jobs in January.
• In January, full-time jobs fell by 9,800 after falling by 13,900 in December. Part-time jobs rose by 20,200 after rising by 10,100 in December.
• The unemployment rate was steady at 5.4 per cent in January. The participation rate eased from 65.1 per cent to 65.0 per cent – a six year low.
• The number of hours worked fell by 0.2 per cent in January after an upwardly-revised gain of 0.1 per cent in December. Hours worked stand 1.2 per cent higher than a year ago.
• Unemployment across states and territories: NSW 5.1 per cent (5.1 per cent in December); Victoria 6.1 per cent (5.6 per cent); Queensland 5.5 per cent (6.1 per cent); South Australia 6.1 per cent (5.8 per cent); Western Australia 4.0 per cent (4.3 per cent); Tasmania 7.8 per cent (7.4 per cent); Northern Territory 3.9 per cent (3.9 per cent); ACT 4.5 per cent (4.4 per cent).

What does it all mean?
There is something for everyone in the latest jobs data. The optimists could focus on the rise in overall employment and conclude all is fine. The pessimists would look at the third consecutive fall in full-time jobs coupled with the fall in hours worked and conclude something more concerning.

What is clear is the job market isn’t shooting the lights out but by no means is unemployment soaring. In a big picture sense the job market is in a holding pattern with a modest degree of softening.

Yes, it was encouraging that employment grew but more forward looking indicators like job advertisements have suggested that further labour market gains may be more circumspect. In fact internet and newspaper job advertisements have fallen for 11 consecutive months, suggesting job growth is likely to flat line in coming months.
Of course, the figures shouldn’t be taken literally. The data is volatile from month to month and there is a fair margin for error. And the more smoothed trend figures suggest that the job market is largely flat with the unemployment rate generally holding in a 5.2-5.4 per cent range.

Employers aren’t keen to hire unless they have to, given the global uncertainties. But while jobs are being lost in some industries, clearly they are being created in other industries. Overall it does seem like a fair proportion of Aussie businesses are holding onto existing staff, rather than culling staff or significantly adding to the workforce.

In a perverse way the unemployment rate is holding steady because more people gave up the search for work. A smaller proportion of people are in the workforce – people in jobs or are looking for work – with the participation rate holding at a six-year low. Overall the fall in the participation rate is not as concerning as it may sound. Previous reports that we have published on participation rates and demographics have highlighted that a lot more of the younger workforce are opting for higher education given the sluggish labour market. And as activity levels pickup and employers are keener to hire, the participation rate is likely to also to rise.

Over the past year the missing ingredient in the domestic economy has been confidence, however there are anecdotal signs that there is an improvement in confidence. Rate cuts, healthy house prices and rising share markets should provide some level of encouragement to policymakers, households and businesses.

While the overall jobless rate for Australia didn’t budge in January, that wasn’t the case with results for states and territories. But the data for the states and territories should be taken with a grain of salt. It is highly unlikely that the jobless rate plunged in Queensland and Western Australia in January but soared in Victoria, Tasmania and South Australia.

Overall the job market has softened somewhat given caution about the global economy, but not dramatically so. The smart employers are not shedding staff, rather showing greater flexibility in hiring of staff and the number of hours worked by existing staff.

What do the figures show?

• Employment rose by 10,400 in January after an improved result for December.
• In December, employment fell by 3,800 jobs, not 5,500 as previously reported. Economists had expected a 5,000 lift in jobs in January. In January, full-time jobs full-time jobs fell by 9,800 after falling by 13,900 in December. Part-time jobs rose by 20,200 after rising by 10,100 in December.
• The annual employment growth rate fell from 1.3 per cent to 0.9 per cent in January. The working age population rose by 37,500 in January after lifting by 24,500 in December. The working age population grew by 1.72 per cent over the past year.
• The unemployment rate was steady at 5.4 per cent in January. The participation rate eased from 65.1 per cent to 65.0 per cent – a six year low. The number of hours worked fell by 0.2 per cent in January after an upwardly-revised gain of 0.1 per cent in December. Hours worked stand 1.2 per cent higher than a year ago.
• Unemployment across states and territories: NSW 5.1 per cent (5.1 per cent in December); Victoria 6.1 per cent (5.6 per cent); Queensland 5.5 per cent (6.1 per cent); South Australia 6.1 per cent (5.8 per cent); Western Australia 4.0 per cent (4.3 per cent); Tasmania 7.8 per cent (7.4 per cent); Northern Territory 3.9 per cent (3.9 per cent); ACT 4.5 per cent (4.4 per cent).
• Queensland recorded the biggest job gains in January (+30,200), followed by NSW (+8,100), Western Australia (+2,100), Northern Territory (unchanged in trend terms) and the ACT (+ 200 in trend terms). Jobs fell most in Victoria (-30,000), followed by South Australia (down 3,100) and Tasmania (-1,500).

What is the importance of the economic data?
The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel.

If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.

What are the implications for interest rates and investors?
The rate cuts in recent times will help to support activity and continue to provide businesses with more breathing space – especially given that trading conditions are difficult. As a result it is more likely that businesses will hold onto current staff rather than culling employees their existing workforce.

The jobs data will be closely watched by the Reserve Bank in coming months. An array of indicators has suggested that activity levels have bottomed out and showing modest signs of improving. Policymakers will want to get a better gauge of what is going on before electing to cut rates again. CommSec expects interest rates to remain largely on hold over the next couple of months.

The chance of a rate cut in March has receded following the employment figures. Market pricing is now 47 per cent chance of a quarter per cent rate cut compared with 55 per cent before the data release.

The post More jobs, fewer hours, steady jobless rate appeared first on AdviserVoice.

• In September, full-time jobs rose by 32,100 after rising by 800 in August. Part-time jobs fell by 17,700 after falling by 9,900 in August. Full-time jobs have only fallen once in the past five months.
• The unemployment rate lifted from 5.1 per cent to 30-month high of 5.4 per cent in September as the number of people entering the job market outweighed the number finding work. The participation rate rose from a near 6-year low of 65.0 per cent to 65.2 per cent.
• The number of hours worked rose by 0.5 per cent in September after falling 0.3 cent in August and now stands 0.3 per cent higher in annual terms.
• The proportion of youths in the workforce is the lowest in 18 years. On average over the past year, 55.2 per cent of 15-19 year olds (including students) were in jobs or looking for work. There has been a sharp decline in the proportion of youths in the workforce over the past four years.
• Unemployment across states and territories: NSW 5.2 per cent (4.9 per cent in August); Victoria 5.6 per cent (5.6 per cent); Queensland 6.3 per cent (6.0 per cent); South Australia 5.6 per cent (5.7 per cent); Western Australia 4.0 per cent (4.0 per cent); Tasmania 7.3 per cent (6.8 per cent); Northern Territory 3.9 per cent (3.9 per cent); ACT 3.8 per cent (3.7 per cent).

What does it all mean?

• The doom and gloom headlines suggest jobs are being slashed across the nation. The official jobs data suggests otherwise. In fact, the data suggests that more than 32,000 people found new full-time jobs in the latest month – hardly indicative of a parlous job market.
• Of course, the figures shouldn’t be taken literally. The data is volatile from month to month and there is a fair margin for error. So the trend remains your friend. And the trend figures suggest that the job market is largely flat with the unemployment rate generally holding in a 5.1-5.3 per cent range. Certainly there are a number of employers that are cutting costs and thus shedding jobs. Other employers are sitting tight. And still others, especially in hospitality, health and resources, are crying out for staff.
• It would be wrong to conclude from the latest data that hiring is going gangbusters. And it would be wrong to conclude that unemployment is soaring. In a big picture sense the job market is in a holding pattern.
• The real surprise is that the 5.4 per cent jobless rate is actually a 2½-year high. It just highlights the extent that the job market has been in a holding pattern with unemployment in a tight 5.1-5.3 per cent range.
• The latest job figures provide more complications for Reserve Bank. A surge in both job growth and the unemployment rate in the same month make it more difficult to know what the true situation is. But looking across a raft of indicators, the best appraisal is that the economy is in a holding pattern. As such, rate cuts still remain on the agenda, but the size of job growth in the latest month does make it harder for the Reserve Bank to justify a rate cut in November.
• One of the interesting trends in the job market is how few young students have jobs. Of those between 15-19 years (mainly students), only 54.2 per cent had jobs or were looking for work in September. Using rolling annual averages to smooth out seasonality, the average was 55.2 per cent in the year to September – the lowest level in 18 years. Retail and hospitality businesses are crying out for staff and students could be filling those positions. The question is whether students aren’t keen on working and studying at the same time or whether labour laws are hindering employers from taking on young workers.

What do the figures show?

• Employment rose by 14,500 in September after a revised fall of 9,100 jobs in August (previously -8,800). The job-market has exhibited a zig-zag pattern over the past five months. Economists had expected 5,000 jobs to be added. Part-time jobs fell by 17,700 after falling by 9,900 in August. Full-time jobs rose by 32,100 after rising by 800 positions in August.
• The annual employment growth rate remained at 0.5 per cent in September. The working age population rose by 22,300 in September after lifting by 22,500 in August. The working age population grew by 1.33 per cent over the past year – the fastest rate of growth in 14 months.
• The unemployment rate rose from 5.1 per cent to a 30-month high of 5.4 per cent in September. The participation rate lifted from a near 6-year low of 65.0 per cent (lowest since November 2006) to 65.2 per cent.
  The number of hours worked rose by 0.5 per cent in September after falling 0.3 cent in August and now stands 0.3 per cent higher in annual terms.
• In trend terms employment fell by 1,000 in September, the unemployment rate equalled the 26-month high of 5.3 per cent set in August and the participation rate held at 65.2 per cent for the fourth month.
  Unemployment across states and territories: NSW 5.2 per cent (4.9 per cent in August); Victoria 5.6 per cent (5.6 per cent); Queensland 6.3 per cent (6.0 per cent); South Australia 5.6 per cent (5.7 per cent); Western Australia 4.0 per cent (4.0 per cent); Tasmania 7.3 per cent (6.8 per cent); Northern Territory 3.9 per cent (3.9 per cent); ACT 3.8 per cent (3.7 per cent).
• NSW recorded the biggest job gains in September (+13,300), followed by Western Australia (+11,100), Victoria (+9,100), South Australia (+3,600), Northern Territory (+500 in trend terms), ACT (+100 in trend terms). Jobs fell most in Queensland (-20,800), and Tasmania (+1,100).

What is the importance of the economic data?

• The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel.
• If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.

What are the implications for interest rates and investors?

• Last month we wrote the following and we see no reason to change it: “The job market is flat, and the lead indicators such as job advertisements suggest that there is little improvement on the horizon. It is more likely that the job market will soften a little further in coming months, and that could prompt the Reserve Bank to cut rates. The working age population is growing, meaning that it will take more jobs to be created to prevent the jobless rate from rising.”
• “Investors should be careful about following the headlines, without digging further to determine if they have the true picture. While some businesses are paring back staff, others still complain that it is hard to attract and retain good people.”
• In terms of new observations, we are concerned that there aren’t more students supporting the job market. Back in my day (showing my age), plenty of kids between 15 and 19 years of age had part time jobs at supermarkets, food stores or other retailers. Are young people still interested in taking on part-time positions, or is the problem with labour or tax laws? If families are indeed doing it tough you would assume there would be more students with part-time jobs to get some added pocket money. The long-term challenge of an ageing population in Australia is to increase the workforce participation rate. Authorities should be investigating any barriers that prevent people from joining the job market.

The post Underlying strength in volatile job data appeared first on AdviserVoice.

What does it all mean?
There is something for everyone in the latest jobs data. The optimists could focus on the lower jobless rate and conclude all is fine. The pessimists would look at the fall in jobs, the participation rate and hours worked and conclude something more sinister.

In truth though, the job market is softening, but only gradually. Employers aren’t keen to hire unless they have to, given the global uncertainties. But while jobs are being lost in some industries, clearly they are being created in other industries.

The unemployment rate is down because more people gave up the search for work than those who lost jobs in the month. And that is the main area of concern in the latest jobs report. A smaller proportion of people are in the workforce – people in jobs or are looking for work – with the participation rate at 6-year lows. Reasons for this trend must be identified and corrected.

For many, today’s jobs figures are still reasonably encouraging given all the anecdotes of jobs being lost. The truth is that job losses are reported, and reported on page 1, but job gains aren’t reported, or if they are, it is on page 32.

The Reserve Bank must stand poised to cut rates as necessary. But the latest jobs data is no smoking gun.

The job market has softened, but not dramatically. In fact for those in NSW, the jobs data is quite encouraging. Employment rose by 3,300, while the jobless rate fell to 4.8 per cent. NSW – the new powerhouse economy – who knew?

What do the figures show?

• Employment fell by 8,800 in August after a revised gain of 11,700 in July (previously +14,000). It was only the second fall in jobs in six months. Economists had expected 5,000 jobs to be added.
• Part-time jobs fell by 9,300 after rising by 4,100 in July. Full-time jobs rose by 600 after rising by 7,600 in July.
• The annual employment growth rate stood at 0.5 per cent in August, a five-month low. The working age population rose by 22,500 in August after lifting by 22,300 in July.
• The working age population grew by 1.29 per cent over the past year – the fastest rate of growth in 12 months.
• The unemployment rate eased from 5.2 per cent to 5.1 per cent in August. The participation rate eased from 65.2 per cent to a near 6-year low of 65.0 per cent (lowest since November 2006).
• The number of hours worked fell by 0.4 per cent after rising by 0.8 per cent in July to be 0.7 per cent lower in annual terms.
• Unemployment across states and territories: NSW 4.8 per cent (5.2 per cent in July); Victoria 5.6 per cent (5.4 per cent); Queensland 5.9 per cent (5.8 per cent); South Australia 5.7 per cent (5.4 per cent); Western Australia 3.9 per cent (3.7 per cent); Tasmania 6.8 per cent (6.5 per cent); Northern Territory 4.2 per cent (4.2 per cent); ACT 3.6 per cent (3.6 per cent).
• Western Australia recorded the biggest job gains in August (+6,900), followed by Queensland (+5,700), NSW (+3,300) and Tasmania (+1,200). Jobs fell the most in Victoria (-14,800) followed by South Australia (-9,000). In trend terms employment rose in the ACT (+400) and rose by 300 in the Northern Territory.

What is the importance of the economic data?
The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel.

If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.

What are the implications for interest rates and investors?
The job market is flat, and the lead indicators such as job advertisements suggest that there is little improvement on the horizon. It is more likely that the job market will soften a little further in coming months, and that could prompt the Reserve Bank to cut rates. The working age population is growing, meaning that it will take more jobs to be created to prevent the jobless rate from rising.

Investors should be careful about following the headlines, without digging further to determine if they have the true picture. While some businesses are paring back staff, others still complain that it is hard to attract and retain good people.

The post More people give up search for work appeared first on AdviserVoice.

• Retail trade: Retail spending fell by a surprising 0.8 per cent in July after lifting by 1.2 per cent in June. Annual spending growth fell from 5.3 per cent to 3.5 per cent. Sales fell across all eight states and territories. The biggest drop in spending occurred at “Department stores” down 10.2 per cent in July – marking the biggest monthly slide in over seven years.
• Inflation: The TD Securities-Melbourne Institute monthly inflation gauge rose by 0.6 per cent in August after no change in prices over the following three months. Excluding volatile items, the inflation gauge rose 0.2 per cent in August.
• Bad news for job seekers: The number of job advertisements fell for the fifth straight month, dropping by 2.3 per cent in August to stand 9.6 per cent lower for the year.
• Profits slump: Company profits for the third straight quarter, dropping by 0.7 per cent in the June quarter to stand 6.5 per cent lower than a year ago.
• Manufacturing up: The Performance of Manufacturing index rose by 5.0 points to 45.3 in August. Still, it was the sixth month below a reading of 50 points, suggesting contraction in the sector.
• Home prices track sideways: The RP Data – Rismark Home Value Index reported that capital city home prices were flat in August after rising by 0.6 per cent in July. Home prices rose by 1.6 per cent in the past three months but are still down 2.4 per cent on a year ago.
• Fuel prices: According to the Australian Institute of Petroleum, the national average retail petrol price fell from 13-week highs, down by 1.8 cents to 144.0 cents a litre in the past week. CommSec tips prices to fall by 1-2 cents a litre over the coming fortnight.

 To read the full report, click here.

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• In July part-time jobs rose by 4,800 after rising by 6,400 in June. Full-time jobs rose by 9,200 after sliding by 34,800 in June.
• The unemployment rate eased from an upwardly revised 5.3 per cent to 5.2 per cent in July. The participation rate eased from 65.3 per cent to 65.2 per cent.
• The number of hours worked rose by 0.8 per cent in July to be 0.2 per cent lower in annual terms.
• Unemployment across states and territories: NSW 5.2 per cent (5.1 per cent in June); Victoria 5.4 per cent (5.5 per cent); Queensland 5.8 per cent (5.3 per cent); South Australia 5.4per cent (6.4 per cent); Western Australia 3.6 per cent (3.5 per cent); Tasmania 6.5 per cent (7.4 per cent); Northern Territory 4.1 per cent (4.1 per cent); ACT 3.7 per cent (3.6 per cent).

What does it all mean?

• The latest employment figures are certainly encouraging – a pickup in jobs across the economy. However given the job losses in the prior month it suggests that the labour market is effectively treading water. In recent times there has been an array of high profile job losses in key industries like manufacturing, transport and housing. But it does seem like a fare proportion of Aussie businesses are holding onto existing staff or hiring new staff, positioning themselves for the pickup in growth and investment over the coming year.
• Over the past year the missing ingredient in the domestic economy has been confidence, however the last month may just prove a real catalyst for a turnaround in confidence. Rate cuts, stronger retail sales data, a pickup in housing activity, rising share markets and the latest employment figures should provide a great deal of encouragement to policymakers, households and businesses. More people in jobs will mean more spending across the economy and more tax receipts for the government.
• What is clear is that the labour market is healthy without shooting the lights out. Yes, it was encouraging that employment grew but more forward looking indicators like job advertisements have suggested that further labour market gains may be more circumspect. In fact internet and newspaper job advertisements have fallen for four consecutive months, suggesting job gains will be less robust in the next few months.
• Still, Australia’s job market remains healthy, supporting growth in the broader economy. And it is still the case that an extra 98,600 odd workers now have jobs compared with the start of this year. And that means more latent spending power. Of course in the current environment people are still more likely to be saving rather than spending – however as confidence improves activity levels will pick up.
• The deep rate cuts in recent times will help to support activity in coming months and provide businesses with a bit more breathing space – especially given that trading conditions are difficult. In addition the Federal Government handouts will provide a short-term lifeline for businesses. As a result it is more likely that businesses will hold onto current staff rather than culling their existing workforce.
• The jobs data will provide another degree of comfort for the Reserve Bank. An array of indicators has suggested that activity levels have bottomed out and showing modest signs of improving. And while policymakers will want to get a better gauge of the impact from the recent stimulatory further rate cuts still remain on the cards. The Central Bank will be more focused on the current situation in Euro Zone and the slowdown in China. CommSec expects another quarter of a per cent rate cut before the end of the year.

What do the figures show?

• Employment rose by 14,000 in July after a revised fall of 28,300 in June (previously 27,000) Economists had expected 10,000 jobs to be added. In July part-time jobs rose by 4,800 after rising by 6,400 in June. Full-time jobs rose by 9,200 after sliding by 34,800 in June.
• The annual employment growth rate rose 0.4 per cent to 0.6 per cent in July. The working age population rose by 22,300 in July after lifting by 19,500 in June. The working age population grew by 1.26 per cent over the past year.
• The unemployment rate eased from an upwardly revised 5.3 per cent to 5.2 per cent in July. The participation rate eased from 65.3 per cent to 65.2 per cent.
• The number of hours worked rose by 0.8 per cent in July to be 0.2 per cent lower in annual terms.
  Unemployment across states and territories: NSW 5.2 per cent (5.1 per cent in June); Victoria 5.4 per cent (5.5 per cent); Queensland 5.8 per cent (5.3 per cent); South Australia 5.4per cent (6.4 per cent); Western Australia 3.6 per cent (3.5 per cent); Tasmania 6.5 per cent (7.4 per cent); Northern Territory 4.1 per cent (4.1 per cent); ACT 3.7 per cent (3.6 per cent).
• Queensland recorded the bulk of the job gains in July (+6,200), followed by NSW (+3,300), South Australia (+2,100), Tasmania (+900). Jobs fell the most in Western Australia (-4,200) followed by Victoria (-3,800). In trend terms employment rose in the ACT (+400) and was flat in the Northern Territory.

What is the importance of the economic data?

• The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel.
• If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.

What are the implications for interest rates and investors?

• The rate cuts in recent times will help to support activity in coming months and provide businesses with a bit more breathing space – especially given that trading conditions are difficult. However the downside risks to global growth – particularly the slowdown in China and ongoing Euro zone debt concerns – will ensure businesses still show a level of cautiousness.
• CommSec is pencilling in a further quarter per cent rate cut before year end.

The post Jobs rebound yet outlook still murky appeared first on AdviserVoice.

• In June part-time jobs rose by 6,600 after falling by 8,600 in May.
• Full-time jobs fell by 33,500 after rising by 36,400 in May.
• The unemployment rate rose from 5.1 per cent to 5.2 per cent in June.
• The participation rate eased from 65.4 per cent to 65.2 per cent.
• The number of hours worked fell by 1.2 per cent in June to be 1 per cent lower in annual terms.
• Unemployment across states and territories: NSW 5.1 per cent (5.0 per cent in May); Victoria 5.5 per cent (5.4 per cent); Queensland 5.3 per cent (5.7 per cent); South Australia 6.4 per cent (5.2 per cent); Western Australia 3.5 per cent (3.8 per cent); Tasmania 7.4 per cent (6.5 per cent); Northern Territory 4.2 per cent (4.1 per cent); ACT 3.6 per cent (3.6 per cent).

What does it all mean?

After singing out of tune for the past few months the job market is certainly back in line with the consistent sluggish performance of the broader economy. Western Australia is still shooting the lights out with a jobless rate of 3.5 per cent, but other states are struggling for momentum.

• In recent times an array of well publicised companies have gone into administration, yet the labour market data suggests that about 86,000 jobs have been created since the start of the year. The job market is very much a mixed picture – high profile job losses mixed in with job gains in key industries like mining and mining related services.
• The latest result confirms a similar view portrayed by the job advertisements series. Job ads have fallen for three consecutive months and are down almost 9 per cent on a year ago. And given that job ads are a leading indicator, it is likely that jobs growth will be much more subdued in coming months.
• Overall it is clear that employers aren’t keen to significantly add to their workforce and at the same time there isn’t enough demand for existing employees to work longer hours. Hours worked fell by 1.2 per cent in June – marking the biggest monthly fall in five months.
• Businesses have highlighted that confidence levels are poor and trading conditions are particularly tough. However the improvement in household budgets – due to the rate cuts and Federal government handouts – may just provide a lifeline for businesses over the next few months, particularly in the retail and service related sectors. If retail activity picks up, businesses will be more hesitant to lay off existing staff.
• The weak jobs result will be looked at closely by the Reserve Bank. However the central bank will be more focused on the current situation in the Euro Zone and even the slowdown in China. Any escalation of the Euro Zone debt crisis is likely to prompt the Reserve Bank to move sooner rather than later when it comes to rates. In our judgement – and even assuming Europe still muddles through in the next few weeks – the next interest rate cut is likely to occur in August. Policymakers should feel more comfortable about inflation after the release of the June quarter inflation figures on July 25, and the focus will then turn to further insulating Australia from the negative global news flow.

What do the figures show?

• Employment fell by 27,000 in June after rising by a revised 27,900 (previously 38,900) in May. Economists had expected a flat result. In June part-time jobs rose by 6,600 after falling by 8,600 in May. Full-time jobs fell by 33,500 after rising by 36,400 in May.
• The annual employment growth rate rose eased from 1 per cent to 0.4 per cent in June. The working age population rose by 19,500 in June after lifting by 19,700 in May. The working age population grew by 1.22 per cent over the past year – equal to the smallest gain in almost 12 years.
• The unemployment rate rose from 5.1 per cent to 5.2 per cent in June. The participation rate fell from 65.4 per cent to 65.2 per cent.
• The number of hours worked fell by 1.2 per cent in June to be down 1.0 per cent in annual terms.
• Unemployment across states and territories: NSW 5.1 per cent (5.0 per cent in May); Victoria 5.5 per cent (5.4 per cent); Queensland 5.3 per cent (5.7 per cent); South Australia 6.4 per cent (5.2 per cent); Western Australia 3.5 per cent (3.8 per cent); Tasmania 7.4 per cent (6.5 per cent); Northern Territory 4.2 per cent (4.1 per cent); ACT 3.6 per cent (3.6 per cent).Western Australia was the only state to record job gains in June (+1,000). Jobs fell the most in NSW (-14,600) followed by Queensland (-10,400), South Australia (-4,800), Victoria (-3,200), and Tasmania (-3,100). In trend terms employment fell in Northern Territory (-800) and rose in the ACT (+300).

What is the importance of the economic data?

• The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.).
• The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel.If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.

What are the implications for interest rates and investors?

• The rate cuts over the last couple of months will help to support activity in coming months and provide businesses with a bit more breathing space – especially given that trading conditions are difficult. However the downside risks to global growth – particularly the slowdown in China and ongoing Euro zone debt concerns – will ensure businesses still show a level of cautiousness.
• CommSec is pencilling in a quarter per cent rate cut in August, given the ongoing European debt concerns and the overall low inflation environment.
• As activity levels pick up over the coming year the Reserve Bank will focus more predominantly on wage costs and labour productivity.

The post Job losses and murky outlook appeared first on AdviserVoice.

What does it all mean?

• The detailed labour market data has added further weight to the underlying strength in labour demand. Over 60,000 jobs were created in the three months to May – marking the best quarterly result since late 2010.
• Given all the media focus on high profile job losses in key industries like manufacturing, transport and housing, it is understandable that consumers are uncertain when it comes to job security. But the latest result paints a far different picture. Not only are businesses holding onto existing staff but they are actively hiring new staff, positioning themselves for the pickup in growth and investment.
• Encouragingly jobs growth was broad-based, occurring in 12 of the 19 industry sectors. And more importantly the strength in employment was not just centred on the fabled mining sector, rather it was Professional & scientific services that led the gains followed by Education & training and then Mining. Even the beleaguered hospitality sector seemed to go on a hiring spree, with Accommodation & food services hiring 24,000 workers in the quarter. What the data does confirm is that the domestic economy remains fundamentally sound and the lack of activity is more a confidence and momentum driven issue than a structural rift.
• Granted there are sectors that have been finding conditions difficult, and the data highlights the multispeed nature of the domestic economy. While an array of sectors were showing signs of improvement, job losses continued to gather pace in the manufacturing and construction sectors. In fact the manufacturing sector has not recorded annual employment growth in nearly four years. The strength of the Australian dollar and higher comparative wages has resulted in the sector being less competitive on the global front.
• The construction sector has shed almost 60,000 jobs in the past year, driven by the lack of interest in new housing. The higher interest rates have been detrimental to the sector. However given the sizeable recent rate cuts and more fiscal stimulus to incentivise first home buyers in NSW, it is likely to result in an improvement in activity. It is still early days but already business and consumers have shown more willingness to borrow money for investment, construction and spending.
• When it comes to employment growth the mining sector stands head and shoulders above the rest. Over the past year mining has expanded strongly with phenomenal job growth of almost 27 per cent. Over the medium term the demand for commodities should remain robust, ensuring that mining will be a key driver of the Australian economy. In fact the strength in mining employment goes a long way in explaining the disparity in the state economic growth rates released last week.
• The mining sector posted the biggest job gains in percentage terms over the past year, but its importance needs to be kept in perspective. Mining still only accounts for a quarter of a million jobs, or just over two per cent of all workers. The Health Care sector is over five times the size of mining in terms of employment. The aging population means that more and more workers will be required in Health Care over time.

What do the figures show?

• Over the three months to May, employment across Australia rose by 60,400 – the best quarterly jobs growth since November 2010. Job losses were recorded in just seven of the 19 industry sectors.
• Biggest job gains were in Professional, Scientific and Technical Services, up 41,800, followed by Education & training, up 30,300 and Mining, up 25,500.
• Public administration & safety led the job losses, with employment sliding by 37,300. Next weakest was Other services, down 26,300, and Construction, down 22,900.
• The biggest industry sector – Health care and social assistance – recorded a 6,600 increase in jobs in the three months to May.
• But over the year to May, Health Care was the biggest job gainer, up 62,600, followed by Professional, Scientific and Technical Services, up 77,600 and Mining, up 58,100. In percentage terms, Mining was the biggest job gainer over the year, up 26.8 per cent. What is the importance of the economic data?
• Detailed Labour Force estimates are released the Bureau of Statistics each month with quarterly industry estimates published each quarter. The data assists in highlighting the industries which are expanding and contracting, thus providing additional insights into the current performance of the economy.

What are the implications for interest rates and investors?

• Looking forward the labour market is likely to remain well balanced in the short term. However the key for the Reserve Bank is what happens when activity levels pick up across the economy. A strong skilled migration program will be key to ensuring that wage costs don’t lead to excessive inflationary pressures over the medium-longer term.
• CommSec expects the Reserve Bank to cut rates once more in August to support confidence and insulate the domestic economy from the ongoing European debt crisis.

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• Full time jobs the key: In May part-time jobs fell by 7,200 after rising by 25,200 in April. Full-time jobs rose by 46,100 after falling by 18,000 in April.
• Jobless rate rises: The unemployment rate rose from 4.9 per cent to 5.1 per cent in May. The participation rate rose from 65.2 per cent to 65.5 per cent.
• Males workers are having a far easier time in the workforce: The gap between female and male underutilisation rates was the largest in 7½ years.
• Fewer hours worked: The number of hours worked fell by 0.3 per cent in May to be up 0.9 per cent in annual terms.
• Unemployment across states and territories: NSW 5.0 per cent (4.9 per cent in April); Victoria 5.4 per cent (5.3 per cent); Queensland 5.7 per cent (5.1 per cent); South Australia 5.1 per cent (5.2 per cent); Western Australia 3.8 per cent (3.8 per cent); Tasmania 6.6 per cent (8.1 per cent); Northern Territory 4.0 per cent (4.0 per cent); ACT 3.4 per cent (3.5 per cent).

What does it all mean?

• The latest employment figures are certainly heartening – a pickup in jobs across the economy. For the last year the missing ingredient in the domestic economy has been confidence, however this week may just change all that – providing a real catalyst for a turnaround in confidence. Rate cuts, strong economic growth data and the latest employment figures should provide a great deal of encouragement to policymakers, households and businesses. More people in jobs will mean more spending across the economy and more tax receipts for the government.
• Give all the media focus on job losses in key industries like manufacturing, transport and housing it is hard to believe that there is an ongoing improvement in labour hiring. Even economist forecasts centred on a flat result for May, but the result was far more upbeat with almost 39,000 jobs created. It seems that a fare proportion of Aussie businesses are holding onto existing staff or hiring new staff, positioning themselves for the pickup in growth and investment. It is the old adage that bad news travels quickly while good news gets swept under the carpet.
• But the result needs to be put into perspective. The job gains in April were revised lower to show almost half the job gains previously reported. In addition total hours worked fell in May while the unemployment rate ticked higher. What is clear is that the labour market is healthy but going sideways. Yes it was encouraging that employment grew for the third consecutive month but more forward looking indicators like job advertisements have suggested that further labour market gains may be more circumspect.
• Still comparing the job market in Australia with markets in Europe or the US is like comparing chalk with cheese. Australia’s job market remains healthy, supporting growth in the broader economy. And it is still the case that an extra 86,500 odd workers now have jobs compared with three months ago. And that means more latent spending power. Of course in the current environment people are still more likely to be saving rather than spending – however as confidence improves activity levels will pick up.
• Interestingly male workers are having a far easier time in the workforce than their female counterparts. The gap between female and male underutilisation rates (measures the proportion people that are unemployed or want to work longer hours) is the largest in 7½ years. The structural shift taking place across the economy seems to have something to do with the changing dynamics of the Australian workforce. More demand for male orientated jobs like mining and construction continue to outpace female orientated roles like admin, retail and service orientated sectors.
• The rate cuts over the last couple of months will help to support activity in coming months and provide businesses with a bit more breathing space – especially given that trading conditions are difficult. In addition the downside risks to global growth – particularly the slowdown in China and ongoing Euro zone debt concerns – will ensure businesses still show a level of cautiousness. As a result it is more likely that businesses will hold onto current staff rather than significantly adding to their workforce.
• The jobs data is unlikely to make waves at the Reserve Bank. Rather the central bank will be more focused on the current situation in Euro Zone and even the slowdown in China. Any escalation of the Euro Zone debt crisis is likely to prompt the Reserve Bank to move sooner rather than later when it comes to rates. In our judgement – and assuming Europe still muddles through in the next few weeks – the next interest rate cut won’t occur until August. Policymakers will want to get a better gauge of the impact from the recent rate cuts while conserving ammunition in case global conditions deteriorate sharply.

What do the figures show?

• Employment rose by 38,900 in May after rising by a revised 7,100 (previously 15,500 in April). Economists had expected a flat result. In May part-time jobs fell by 7,200 after rising by 25,200 in April. Full-time jobs rose by 46,100 after falling by 18,000 in April.
• The annual employment growth rate rose from 0.6 per cent to 1.0 per cent in May. The working age population rose by 19700 in May after lifting by 19,500 in April. The working age population grew by 1.22 per cent over the past year – equal to the smallest gain in almost 12 years.
• The unemployment rate rose from 4.9 per cent to 5.1 per cent in May. The participation rate rose from 65.2 per cent to 65.5 per cent.
  The number of hours worked fell by 0.3 per cent in May to be up 0.9 per cent in annual terms.
  Unemployment across states and territories: NSW 5.0 per cent (4.9 per cent in April); Victoria 5.4 per cent (5.3 per cent); Queensland 5.7 per cent (5.1 per cent); South Australia 5.1 per cent (5.2 per cent); Western Australia 3.8 per cent (3.8 per cent); Tasmania 6.6 per cent (8.1 per cent); Northern Territory 4.0 per cent (4.0 per cent); ACT 3.4 per cent (3.5 per cent).
• NSW led the job gains in May (+30,300), followed by Victoria (+13,500), Western Australia (+6,000), and South Australia (+2,400). Jobs fell most in Queensland (-5,700) and Tasmania (-4,300). In trend terms employment fell in Northern Territory (-300) and fell in the ACT (-300).

What is the importance of the economic data?

• The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel.
• If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.

What are the implications for interest rates and investors?

• As activity levels pick up over the coming year the Reserve Bank will focus more predominantly on wage costs and labour productivity. Over the medium term subdued wage costs and/or an improvement in productivity will be crucial in ensuring that the Reserve Bank has scope to comfortably cut rates.
• CommSec is pencilling in a quarter per cent rate cut in August, given the ongoing European debt concerns and the overall low inflation environment.

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• Healthy mix in jobs: In January part-time jobs rose by 34,000 after falling by 59,700 in December. Full-time jobs rose by 12,400 after rising by 24,000 in December.
• Jobless rate eases: The unemployment rate fell from 5.2 per cent to 5.1 per cent in January. The participation rate rose modestly from 65.2 per cent to 65.3 per cent.
• Less hours worked: The number of hours worked fell by 1.4 per cent in January to be up just 0.2 per cent in annual terms – marking the weakest growth rate in two years.
• Unemployment across states and territories: NSW 5.2 per cent (5.6 per cent in December); Victoria 5.1 per cent (unchanged); Queensland 5.4 per cent (unchanged); South Australia 5.1 per cent (5.3 per cent); Western Australia 4.2 per cent (unchanged); Tasmania 7.0 per cent (6.3 per cent); Northern Territory 4.2 per cent (unchanged); ACT 3.7 per cent (unchanged).

What does it all mean?

• At first glance the latest employment figures are heartening – a pickup in jobs across the economy. But the result needs to be put into perspective. The job losses in December were revised higher to show almost 36,000 positions were cut, and in effect the January result just negates those losses. What is clear is that the labour market is going sideways. Yes it was encouraging that employment grew in January but looking forward a sustained pickup in employment will be needed to justify a turnaround in the fortunes of job seekers.
• Interestingly the number of hours worked fell in January and in annual terms hours worked barely increased growing by just 0.2 per cent – marking the weakest growth rate in two years. It’s clear that the lack of momentum in the domestic economy is being reflected in the labour market. Employers are looking at avenues to remain profitable and subduing costs is a clear priority.
• The rate cuts late last year will help to support activity in coming months and provide businesses with a bit more breathing space. But there is no doubt that trading conditions are difficult and profitability is being affected. In addition the strength of the Australian dollar will continue to cripple manufacturing, tourism and exports outside the resources space. As a result it is more likely that businesses will hold onto current staff rather than significantly adding to their workforce.
• Still, comparing the job market in Australia with markets in Europe or the US is like comparing chalk with cheese. Australia’s job market remains healthy, supporting growth in the broader economy. And it is still the case that an extra 46,000 odd workers now have jobs compared with a month ago. And that means more latent spending power. Of course in the current environment people are still more likely to be saving rather than spending.
• The jobs data is unlikely to make waves at the Reserve Bank. Rather the central bank will be more focused on the current situation in Euro Zone and even the slowdown in China. Any escalation of the Euro Zone debt crisis is likely to prompt the Reserve Bank to move sooner rather than later when it comes to rates. In our judgement – and assuming Europe still muddles through in the next few weeks – the next interest rate cut won’t occur until May – after the next round of inflation data. However the risks are policymakers move earlier.

What do the figures show?

• Employment rose by 46,300 in January. Economists had tipped job gains of around 10,000. The December result was revised from an initially reported loss of 29,300 people to a loss of 35,700. Full-time employment rose by 12,400 in January and part-time jobs rose by 34,000.
• The annual employment growth rate held at 0.3 per cent in January – just shy of the weakest growth rate in almost 19 years. The unemployment rate fell from 5.2 per cent to 5.1 per cent in January. The participation rate rose from 65.2 per cent to 65.3 per cent.
• Average hours worked fell by 1.4 per cent in January after rising by 0.2 per cent in December. The number of hours worked is up 0.2 per cent on a year ago – the slowest annualised growth in hours worked in two years.
• Across the states and territories unemployment rates in January were: NSW 5.2 per cent (5.6 per cent in December); Victoria 5.1 per cent (unchanged); Queensland 5.4 per cent (unchanged); South Australia 5.1 per cent (5.3 per cent); Western Australia 4.2 per cent (unchanged); Tasmania 7.0 per cent (6.3 per cent); Northern Territory 4.2 per cent (unchanged); ACT 3.7 per cent (unchanged).
  Queensland and Western Australia led the job gains in January (up 20,000), followed by NSW (+10,900), South Australia (+3,200). Employment was flat in Victoria. Jobs fell in just Tasmania (-4,100). In trend terms employment rose in Northern Territory (+200) and ACT (+500).
• The working age population rose by 18,500 in January after lifting by 21,100 in December. The working age population grew by 1.2 per cent over the past year – the smallest gain in 11 years.

What is the importance of the economic data?

• The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel.
• If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.
  What are the implications for interest rates and investors?
• The latest jobs result was encouraging however given that employment growth is crawling of a low base it is likely that conditions in the labour market will remain soft over the first half of 2012. – as a result it is likely that the unemployment rate will rise modestly toward 5.7 per cent over the coming year.
• The recent rate cuts will help to support activity at the margin, but given the ongoing concerns in Europe and no clear resolution to the debt crisis it is likely that the Reserve Bank will cut rates sooner rather than later.

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