The one Christmas present Kevin Rudd doesn’t need
At first blush today’s employment figures are an early Christmas present for the federal government. Some 30,000 jobs were created in November and the unemployment rate, against expectations, crept downwards by the tiniest of notches.
But there won’t be any champagne popping in the Cabinet room. There’s a worrying trend beneath the figures: the mining states, which you’d assume are leading Australia’s unexpected economic performance, are actually shedding jobs. It’s the states in the southeast - previously the laggards - where the jobs are being created.
So [the run-up] to Christmas
Eve will be a nervous one for Kevin Rudd. Santa could be preparing a big sack of trouble to chuck down his chimney in the form of the national accounts which come out on December 24 16 and should give a clearer indication of any weak spots in the economy.
A movement of 0.1 of a percentage point in the national jobless figure is so slight that it might as well be no movement at all.
But in Western Australia, the supposed powerhouse of the economy, jobs are being lost, and unemployment was up 0.3 of a percentage point. (Numbers nerds – it’s 5.0 to 5.2 per cent, but the ABS says it’s 0.3 thanks to the rounding.)
Unemployment was also up in South Australia (+0.2) and practically flat in the other mineral powerhouse, Queensland, where a few hundred jobs were lost.
Victoria had the best performance of all the states, with unemployment down 0.3 of a point. NSW also created several thousand jobs, with the unemployment figure falling by 0.2 points, according to the ABS.
It was only months ago that unemployment was expected to head for about 8 per cent but even after the government revised its forecast to 6.75 per cent after Australia astonishingly avoided slipping into recession, how the economy is persisting in defying the expectations is anybody’s guess.
So here’s mine.
The diverse and flexible economies of the big cities – Sydney and Melbourne – have been creating net jobs as big retailers and the hospitality industry gear up for Christmas. But across the economy jobs are still being shed in many sectors and some time in the new year – say February or March – we’ll really start to see the effects of this in the jobless figures.
A mining industry source said today projects were proceeding in the west but it could be six months or more before they come into full operation and start creating large numbers of jobs. The sector was also expecting a slight downturn in the middle of next year, the source said.
The strength of the dollar is making exports less competitive and that is likely to continue if, as expected, interest rates continue to creep upwards over the coming year.
While the indicators are good in the medium-term for the economy, Kevin Rudd could be fighting next year’s election with a trifecta of potential short-term political difficulties: rising interest rates, rising unemployment, and no money in the bank for a champagne budget in May.
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