The official unemployment number remains low, but should we be concerned?
The June employment figures are in and while the unemployment rate rose slightly to 4.1 per cent, there were 50,000 new jobs created in the month – which was a lot more than the 39,000 created in May and the 20,000 expected by a lot of economists in June.
The reason the unemployment rate rose when there was such strong jobs growth was because the participation rate rose – that’s the number of adults in work. Australia has one of the highest percentages of adults in work in the world.
Word on the street
For some time I’ve been a bit fearful that the unemployment rate hasn’t been reflecting how bad the jobs market is with record business insolvencies and big company retrenchments. Plus job advertisements are down and more people are applying for each job. All signs that the jobs market is softening.
Business insolvency figures are spiking toward new records. The media seems to have a daily focus on prominent restaurants/cafes/bakeries that are closing. I walk through a major shopping centre on my way from the office to the gym and am amazed at how many shops have closed and sit dark with “for lease” signs plastered across the windows.
Then at the big end of town Telstra, the big banks, mining companies and media empires have been announcing mass redundancies. But it’s not being reflected in the official figures. Is it because those who have recently lost their jobs are working through their holiday and retrenchment payout
before they become eligible for JobSeeker and are officially counted?
CommSec has looked at where the new jobs are being created and found it is mostly in the government sector in health, NDIS, education and aged care. While there is a big downturn in jobs in business and industry.
An unemployment figure like this adds to the pressure for the Reserve Bank to lift interest rates at its August board meeting. I doubt that will happen based on yesterday’s employment figure. I reckon the RBA knows how weak the jobs market is despite the official unemployment number remaining low.
However, the June quarter CPI inflation figure is released on July 31 which will now be pivotal for the RBA decision.
