Australia jobs data in focus; 6% rise in unemployment rate expected
9 December 2015, 13:47
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The Australian Bureau of Statistics, which will release new labor data
tomorrow. Australia’s economy at this juncture is very vulnerable as
it trying to rebalancing its economy away from the resource sector. As
the impact of the mining sector boom ebbs, it will be important to
monitor the significant indicators to gain an insight into the
performance of the economy and also gather clues on the central bank’s
future course of action. Jobs data thus assumes great importance. Job
growth in Australia is believed to have eased in November. Economists
polled by The Wall Street Journal estimates unemployment increased 6%
during the month. October had seen a fall in unemployment rate with a
58,600 jump in jobs. Commonwealth Bank of Australia noted “odds are that
a statistical 'payback' for October's large increase in jobs will be
seen, with a fall in jobs in November.”
A net decline of 10,000 jobs will likely push the unemployment rate up from a five-month low of 5.9% in October to 6.0% in November. The participation rate is expected to have remained unchanged 65.0%.
The labor market has remained much stronger over the last year. Solid growth in the labor-intensive service sector offset the decline in mining jobs. The Reserve Bank of Australia (RBA) expects the unemployment rate to hold around 6-6.25% in 2016. According to the RBA, the sectoral composition of economic activity and the flexibility of labor supply have led to a robust labor market. The central bank refrained from further cutting in rates considering strong labor which signifies the possibility of a rise in employment.
Official data lacks credibility
The jobless had dropped to 5.9 per cent in October from 6.2% in September. Job creation took place mostly in arts and recreation services. Official data showed hiring of guards and personal trainers offset the layoffs in the mining sector. Economists however question the credibility of the official labor data. They could not believe that the total number of artists and trainers hired were actually more than the miners who lost their jobs in recent months. Economists have failed to understand how mining firms struggling to stay competitive in the face of declining commodity prices managed to create jobs in such large numbers between May and August. The unbelievable official figures have made it difficult for economists to predict future scenarios.
A net decline of 10,000 jobs will likely push the unemployment rate up from a five-month low of 5.9% in October to 6.0% in November. The participation rate is expected to have remained unchanged 65.0%.
The labor market has remained much stronger over the last year. Solid growth in the labor-intensive service sector offset the decline in mining jobs. The Reserve Bank of Australia (RBA) expects the unemployment rate to hold around 6-6.25% in 2016. According to the RBA, the sectoral composition of economic activity and the flexibility of labor supply have led to a robust labor market. The central bank refrained from further cutting in rates considering strong labor which signifies the possibility of a rise in employment.
Official data lacks credibility
The jobless had dropped to 5.9 per cent in October from 6.2% in September. Job creation took place mostly in arts and recreation services. Official data showed hiring of guards and personal trainers offset the layoffs in the mining sector. Economists however question the credibility of the official labor data. They could not believe that the total number of artists and trainers hired were actually more than the miners who lost their jobs in recent months. Economists have failed to understand how mining firms struggling to stay competitive in the face of declining commodity prices managed to create jobs in such large numbers between May and August. The unbelievable official figures have made it difficult for economists to predict future scenarios.
