Australia | May 07 2009
By Chris Shaw
Given job ads have continued to fall it was reasonable for the market to expect Australian jobs data for April to follow a similar weakening trend. However, forecasters were caught out today with respect to headline numbers as total jobs rose 27,300 for the month against consensus expectations of a fall of around 25,000.
Westpac notes the driver of the result was a recovery in full-time jobs, this measure bouncing by more than 49,000 positions in the period compared to a fall of 39,000 in March, though the bank points out the data are quite volatile and so a better indication comes from revised data.
ANZ Banking Group economist Riki Polygenis agrees, suggesting statistical volatility makes the data difficult to interpret with any great accuracy. Taking trend data as an alternative measure sees a continuation of the deterioration of recent months, with total employment down 4,300 against a revised fall of 3,600 last month. As Westpac notes, the trend annual growth rate of 0.26% implied by today’s data is now the weakest since June 1993.
Where forecasters got it right is in the participation rate, which fell to 65.4% from 65.5% previously. Given this, and the new jobs implied by the headline figure, the result was a fall in unemployment to 5.4% from 5.7% previously, whereas consensus estimates had been for an increase to 5.9%.
The worst is not yet over according to most experts, however. Westpac’s view is that given key lead indicators such as job ads, business surveys and lagged demand growth are still bearish, job growth will continue to fall. The bank is forecasting a decline of 1.5% by the end of the year, which it estimates would push unemployment up to around 7.5%.
ANZ’s Polygenis is even more bearish and sees unemployment reaching 8% by the middle of next year, though she concedes the data imply the economy is stabilising on the back of recent fiscal and monetary measures. This supports the case for the Reserve Bank of Australia (RBA) to remain on hold in coming months in her view, which would allow them scope to act if and when conditions become more challenging later this year.