Surprise drop in full-time jobs
By Chris Zappone | smh.com.au | 10 September
The unemployment rate remained flat at 5.8 per cent in August, but the seemingly healthy outcome masks a sharp drop in the number of full-time jobs.
The official jobless rate has been steady at 5.8 per cent since June. However, there are signs of distress in the jobs market, with the number of job losses almost double what had been expected.
Data released today by the Australian Bureau of Statistics show total employment fell by 27,100 jobs in August, compared to a gain of 33,600 in July.
The dollar dropped on the news. Read about it here
Analysts had expected only 15,000 jobs would have been shed from the workforce over that period. Full-time jobs fell by 30,800, following a downwardly revised loss of 17,300 in July.
There were 3800 more part-time jobs in August, following an upwardly revised gain of 50,900 in July. The participation rate - or the number of people actively engaged in work or looking for work - slipped to 65.1 per cent from 65.3 per cent over the same period.
Deputy Prime Minister Julia Gillard said the drop in total employment meant, "there are Australians who are suffering the effects of the global recession as it hits our economy". "We need to continue economic stimulus to support jobs during these difficult days."
Despite the economy expanding by 0.6 per cent in the second quarter, thereby avoiding recession, economists are still expecting the jobless rate to rise. A year ago economists at JP Morgan’s had tipped the jobless rate to peak at 9 per cent in 2010. The bank has since lowered that forecast to 7.5 per cent.
Leaving the workforce
"There’s not a lot of good news in there other than the unemployment rate staying steady," said Matt Robinson of Moody’s Economy.com. "The shrinking labour force kept the unemployment level steady," he said, but "the total monthly hours worked were down".
Along with a shrinking participation rate, it means people are giving up on the job market and exiting the work force, he said. The total number of months worked in August, declined by 4 million, to 1.507 billion hours, seasonally adjusted, the ABS said.
"Whether it is due to fired workers becoming disillusioned and leaving the workforce, women choosing the current downturn to leave the market to pursue family aspirations, or older workers electing to bring forward retirement plans, this decline in the participation rate is not good news," said Mr Robinson.
"It represents a block of the population who are no longer earning an income, weighing on household consumption levels. "And it is a large group of people for whom re-entering the workforce as the global recovery begins will be just that little bit more difficult."
Preference for short-term positions
Recruiters noted a preference for shorter-term positions in recent weeks, as well. Steele Baillie, managing director of bta executive said his firm has seen more interest in contract positions. "Over the past few months we are at record levels for contract positions especially within our Engineering, Finance and IT sectors," he said.
"The reasons behind this shift is flexibility as they require the position however are being cautious with increasing head count. "The majority of our candidates are open to these positions, more so when currently unemployed.”
Markets react with falls
The employment data knocked about 15 points of the benchmark S&P/ASX200 share index, which was still up 0.4 per cent at 4542 points in midday trade.
The dollar also dropped on the news, falling from 86.14 US cents to 85.88 US cents, as the prospects of lower interest rates for longer became clearer. Also, market expectations for a 0.25 percentage point interest rate rise when the Reserve Bank next meets in October fell, halving to 16 per cent from 31 per cent chance before the data was released.
But the market is still overwhelmingly tipping a rate rise at the November meeting. And investors are pricing in a cash rate of 4.75 per cent by September 2010. A state-by-state breakdown shows the NSW jobless rate steady at 6.1 per cent (5 per cent the same time last year) and the Victorian jobless rate up at 6.3 per cent, compared to 5.9 per cent a month earlier and 4.3 per cent a year ago.
In Queensland, the jobless rate fell to 5.5 per cent from 5.7 per cent in July - it was 3.3 per cent a year ago. WA’s rate has doubled year-on-year and now stands at 5.4 per cent, a slight improvement on July’s 5.7 per cent.
Tasmania’s jobless rate rose one percentage point to 5.1 per cent, month on month, from 3.9 per cent a year ago and in South Australia, it was 5.8 per cent, up 0.1 per cent on the July figure and well up on the 4.4 per cent recorded in August 2008.
This week in Melbourne, Huntsman Chemical said it would close a West Footscray plant by the end of the year, resulting in 200 job losses.
czappone@fairfax.com.au
First published by Smh.com.au on September 10 2009
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