Friday, July 8, 2011

Jobs growth slows to a crawl

AUSTRALIA'S previously buoyant jobs growth has hit the wall in 2011, with only 38,000 jobs created in the first six months of the year, compared with 188,000 in the second half of 2010.

The Bureau of Statistics estimates that jobs growth slowed to almost a crawl in the June quarter. In net terms, the trend level of full-time jobs grew by just 4000 throughout Australia, and part-time jobs by 8300.

The unemployment rate has remained unchanged at 4.9 per cent over that time, but only because the proportion of people surveyed in a job or looking for one has dropped from 65.9 per cent at the end of last year to 65.5 per cent now.

The trend is one of the key reasons for the Reserve Bank's sudden change of mood this week, when governor Glenn Stevens flagged that an interest rate rise was now off the agenda, and said the Reserve would cut its bullish growth forecasts.

It was as close as the Reserve ever gets to saying ''we were wrong''. As late as May, it forecast growth in 2011-12 to be 4.5 per cent. Last Saturday, The Age economic survey reported that private forecasters forecast growth of just 3.2 per cent.

Even that would require a big pick-up in jobs growth from its current pace - on these figures, the slowest since Australia emerged from the global financial crisis two years ago.

On the rough measure that two part-time jobs equal one full-time job, Australia added the equivalent of just 34,000 full-time jobs in the six months to June, compared with 161,000 a year earlier.

Victoria was a beacon of light, creating the equivalent of 25,000 full-time jobs, and reducing trend unemployment to 4.7 per cent - the best of any state except Western Australia (4.2). Over the year to June, the trend figures imply Victoria added the equivalent of 84,000 full-time jobs - an astonishing growth of 3.5 per cent.

In New South Wales, by contrast, the trend figures imply equivalent full-time jobs grew by almost 80,000, or 2.6 per cent, in the second half of 2010, yet then fell by 19,000 in the first half of 2011. Experience shows the survey tends to give roller-coaster results as different people rotate in and out of the survey. Nationally and in NSW, even the smoothed trend figures probably overstate the real jobs growth last year, and overstate the slowdown this year.

The even more volatile seasonally adjusted jobs figures rose by 23,500 in June after falling by 29,000 in the previous two months. Seasonally adjusted unemployment remained at 4.9 per cent.