Well, there was nothing in the February jobs report from the Australian Bureau of Statistics (ABS) to change anyone’s current opinion of the economy.
It’s going nowhere, at a snail’s pace, not creating enough jobs to mop up unemployment.
Like retail sales, trade, car sales, building approvals and housing finance, there were good and bad parts in the jobs report which on the bottom line shows a labour market drifting aimlessly in search of a kickstart.
In a speech on Wednesday. Reserve Bank Assistant Governor, economics, Chris Kent nicely captured the economy’s current state:
"The Bank’s recent update to its forecasts has pushed out the time at which we see GDP growth picking up from its current sub-trend pace. It is not that economic growth has weakened of late. But there is little to suggest that it will increase in the near term. This implies that the unemployment rate will rise for a bit longer and peak a bit higher than previously expected,“ he said.
And it’s that absence of any circuit breaker event or sudden surge in demand or activity in the economy that forced the central bank’s hand and produced February’s surprise rate cut.
And now we have the big drop in resource investment in the next year to contend with, which could push growth to new lows.
The AMP’s chief economist Dr Shane Oliver said in a note yesterday,“For the RBA the latest jobs data will probably have little impact.”
“It knows that the employment stats are highly volatile from month to month and the broad trend in unemployment and labour market underutilisation remains up.
“The high level of labour force underutilisation means that wages growth will remain weak putting downwards pressure on inflation.
“As a result our view remains that the RBA will cut the cash rate again to 2% in the next two months, with a high chance it will cut below that during the second half of the year,” Dr Oliver said.
In its report yesterday, the ABS data showed a small rise in the number of new jobs created, and a dip in the unemployment rate to 6.3% from the 6.4% reached in January.
But the more accurate the trend rate was unchanged on 6.3% and was probably the more accurate reading.
The seasonally adjusted labour force participation rate dropped to 64.6% in February 2015 from 64.7% in January 2015, but the trend rate was steady on 64.7%.
Headline unemployment print shows small improvement
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The ABS said 15,600 new jobs were created last month, seasonally adjusted (taking employment to 11.65 million people). 10,300 of those came in full time work, while 5,300 part time jobs were created. “Seasonally adjusted employment increased for both males (up 9,300) and females (up 6,300) in February 2015,” according to the ABS.
That was a surprise to some economists, while others said all that happened in February was a retracement of the weak month that January was.
Hours worked rose in February, up 13.0 million hours (0.8%) to 1,620.8 million hours, while the seasonally adjusted number of people unemployed fell 15,800 to 777,30
The ABS said the employment to population ratio, which expresses the number of employed persons as a percentage of the civilian population aged 15 years and over, was unchanged at 60.6% (seasonally adjusted) in February 2015. In trend terms, the employment to population ratio was also unchanged at 60.6%.
The largest absolute increases in seasonally adjusted employment were in Victoria (up 12,800 persons) and Queensland (up 8,100 persons). The largest absolute seasonally adjusted fall in employment was in South Australia (down 7,200 persons).
The largest falls in the seasonally adjusted participation rate were in South Australia (down 0.8 percentage points) and Tasmania (down 0.3 percentage points) while the largest increases were in Queensland (up 0.2 percentage points) and Western Australia (up 0.2 percentage points).
The largest decreases in the seasonally adjusted unemployment rate were in Victoria (down 0.5 percentage points) and South Australia (down 0.3 percentage points). The largest increase in the seasonally adjusted unemployment rate was in Western Australia (up 0.2 percentage points), the ABS said.
Data out on Wednesday showed a fall in housing finance in January, despite a solid rise (7.9%) in building approvals for the month, especially for home units and townhouses.
At the same time consumer confidence followed business confidence lower in the latest report from Westpac and the Melbourne Institute.
January figures from the Australian Bureau of Statistics (ABS) shows the number of home loans granted in January fell 3.5% from December, seasonally adjusted, to 51,396.
The total housing finance by value fell 0.6% in the month, seasonally adjusted, to $30.244 billion, with loans for new and existing home purchasers both down along with the value of investor lending which slipped 0.1% to $12.531 billion.
The ABS reported last week that new building approvals jumped 7.9% in January, thanks to a surge in approvals for new non private house approvals (mostly flats, townhouses and apartments).
Meanwhile consumer confidence eased in March, but remained well above its lows of December, according to the latest monthly Westpac-Melbourne Institute sentiment index.
The current index reading of 99.5 is the same as that of March 2014, seasonally adjusted.
The consumer confidence index followed a gloomier survey from National Australia Bank on Tuesday which showed business confidence had slumped to its lowest point since just before the 2013 federal election in February.
