We are not America, Britain or the eurozone: a bit obvious I know, but a point worth making again after looking at the September employment figures.
America’s unemployment figures were tragic, ours roughly OK. Some easing evident, but not the outright collapse that we are seeing in the UK, parts of Europe and especially the US.
We have added jobs this year, America has lost over 700,000.
The small rise in the number of new jobs here last month though was outweighed by a sharp rise in the number of people unemployed and the combination of that pushed the unemployment rate to 4.3% in September, up 0.2% from August.
The Australian Bureau of Statistics Labour Force report shows there was a sharp fall in full time jobs; offset by an increase in part time employment, suggesting perhaps some workers are being shifted to fewer working hours as the domestic economy slows.
The ABS said that full time employment rose 2,200 (seasonally adjusted) to 10,737,400 as full-time employment fell 15,400 to 7,706,800 and part-time employment increased by 17,700 to 3,030,500.
The fall in full time employment reversed the 7,000-plus seen in August. The number of people looking for part time worth was more than double the August number, suggesting that employers are looking to trim full time hours.
The news had little impact on a weak stockmarket which was down around 1.8% just before midday after falling 2.4% in early trading. Tokyo was off a touch after Wednesday’s bone shaking 9% plunge.
The ABS said that September’s outcome was after the number of people employed in August was revised down to 10,200 extra jobs from the original surprise estimate of 14,600.
Our performance, below recent levels admittedly, was still a lot better than the US September outcome of 159,000 jobs lost and several hundred thousand people leaving the workforce and hundreds of thousands of others being put on shorter hours or weeks.
America’s unemployment rate is officially 6.1%. At 4.3% we are still significantly better and the International Monetary Fund sees the figure next year still having a ‘4’ in front of it!
But the September report from the ABS adds to the growing impression that pressure on employment is rising, as companies like GM, Qantas, Fairfax, Clipsal, Southern Pacific Tyres and others either cut employment levels, or prepare to do so.
Small resource groups, Perilya and CBH have together cut well over 600 jobs from their mines at Broken Hill and at Cobar in western NSW. Boeing, Starbucks and the ANZ Bank have also announced cutbacks.
Several other smaller Western Australian mining operations have also laid off staff after closing or cutting back production in recent months as metal prices have tumbled.
Unemployment jumped by 21,700 in the month to 479,600 with the number of people looking for full-time work up 4,400 to 326,800 and the number of people looking for part-time work increasing by 17,300 to 152,800.
With the participation rate steady at 65.1%, the end result was a rise in the unemployment rate to 4.3% in September from 4.1% in August, with male unemployment rate rising by 0.2% to 4.0%, and the female unemployment rate by 0.2% to 4.6%.
The employment numbers bolster the decision by the RBA to cut interest rates this week: without the global turmoil, the central bank would have cut rates by 0.25%. Employment clearly reacted to the slowing pace of activity in the economy.
Those resource job cuts are only small at this stage but will be followed by more from metal miners where price falls have hurt.
The sharply weaker Australian dollar (it was trading around 66 USc yesterday morning after dropping 10% overnight, but then rose to finish over 70 US cents in late New York trading ) will provide some cushioning from the sharp drop in oil, copper and other metals. Gold prices though have held up.
The market’s weakness was as much due to the sharp drop in the price of the Commonwealth Bank which completed its $2 billion fund raising to pay for its $2.1 billion ‘steal’ of BankWwest from HBOS Australia.
The CBA raised the money at around $38; its shares had been trading at $45.15 before the fund raising started yesterday.
The sharp fall took the major indexes lower. The shares traded from a low of $39.20 to a high of $41.29 at midday. The loss of 8.5% in value had a major impact on the market’s performance in the morning.
In fact there’s nothing in this report to go with the downturn in consumer confidence seen in this week’s report from Westpac and The Melbourne Institute.
The lowered October reading choked off a small improvement seen in August and followed the 0.25% rate cut in September, but came as the end of the endless toll of bad news from the financial markets.
A similar fall was reported yesterday by a second confidence survey.
The fall in the Roy Morgan Consumer Confidence Rating was mainly caused by fewer Australians saying that now is a "good time to buy" major household items, with 29% (down 6%) saying that now is a "good time to buy" – the lowest since April 1993, and 40% (up 10%) saying it’s a "bad time to buy".
Australians are also more worried about the economic conditions in Australia as a whole with 44% (up 6%) of Australians expecting bad times financially in the next 12 months compared to only 19% (down 6%) expecting we’ll have good times financially.
So at this stage, lots of Australians are worried about the future, which is understandable, but still have jobs.
At least it isn’t America where this Christmas is shaping up as one of the most miserable and nastiest for decades. Thanksgiving is likely to ring hollow for millions of Americans at the end of next month.
Goldman Sachs JB
