November 12, 2009 – 1:29PM
Australian employment figures are set to join the Australian dollar as being unforecastable. Some time soon the commentariat will need to stop trying to preserve what’s left of its credibility.
While the market “consensus” was for an employment fall of 10,000, the ABS labour force numbers surprised again on the upside – an extra 11,100 on the headline seasonally adjusted rate, a more modest 8700 on the better trend numbers.
The important thing about the employment growth is that it means consumer spending power is rising despite the unemployment rate trickling higher. There is no shortage of potential customers out there with pay packets in their purses and wallets.
The forecasters’ inability to grasp what our economy is up to this year has become legendary. Who can forget the three wise monkeys that popped up with Kerry O’Brien after the May budget was delivered to criticise Treasury’s forecasts as being wildly optimistic, implying Ken Henry had been politically nobbled?
It has of course turned out that the Treasury forecasts were incorrect, being too pessimistic, but no reasonable person would blame them for that. As has been stated in this space before, the important thing about forecasts isn’t what sort of dodgy guarantee that might come with, but whether they are credible.
And credibility has been in short supply in guessing what the workforce is up to. What keeps being overlooked by those trapped in city financial districts is the strength of investment in the ongoing commodities boom and employers’ ability to remember what last year’s full employment was like when trying to hire people with the appropriate skills.
I was in Mackay earlier this week – capital of a region where the GFC was only a pause for breath, where housing is close to Sydney prices and unemployment is minimal. While Australian credit growth was just 1.7 per cent over the past year, the NAB’s Mackay lending book grew by 12 per cent. For every story of a tourist town doing it harder, there’s a resources town booming.
The “war for talent” is back on and is perhaps being made more difficult as the economy picks up by the Immigration Department toughening up on 457 visas.
That realisation is spreading in businesses close to the ground – it’s almost too late to make the best of this crisis in terms of improving the quality of their workforce. It could soon be back to grabbing whoever you can, rather than having a choice of talent.
Yet to surface is any debate about just what Australia’s full employment rate actually is, or at least the NAIRU – the non-accelerating inflation rate of unemployment.
Last week saw Treasury official revise its unemployment peak forecast down to 6.75 per cent. There’s a good chance Wayne Swan will be announcing a lower figure again in May.
We’re likely to have come through the GFC with the peak unemployment being substantially less than our average unemployment rate of the past three decades, and perhaps only about the same as the unemployment rate before the last recession.
Michael Pascoe is a BusinessDay contributing editor