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Category Archives: unemployment

Peter Martin Economics Correspondent
July 7, 2009

THE Reserve Bank board is likely to hold its nerve and keep interest rates steady despite new evidence pointing to a hiring freeze and jump in unemployment.

Newspaper and internet job advertisments slipped a further 6.7 per cent in June to roughly half its level of a year ago and the lowest level since the take-up of internet advertising, according to the ANZ employment survey.

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Newspaper job advertisements in the Herald and the Daily Telegraph slipped 1.2 per cent in June to be down 48 per cent on a year before.

An ANZ economist, Warren Hogan, said that while employers had stopped hiring they were still “hoarding labour” and were yet to seriously shed staff.

“For the moment population growth is driving the unemployment rate up rather than widespread job losses,” he said. “The key to the future is whether … labour shedding picks up.”

Forecasters surveyed by Reuters expect a further 25,000 jobs to be lost when the official figures are released on Thursday, which combined with population growth would push up the unemployment rate from 5.7 per cent to 5.9 per cent. Most expect an unemployment rate of 7 per cent by December.

The Reserve Bank board is likely be unmoved by the outlook for Australian unemployment when it holds its monthly meeting in Sydney this morning, focusing instead on improving prospects for China, which is now Australia’s biggest export customer.

Since the bank’s governor, Glenn Stevens, declared China’s recovery to be “real” at a business function in May, Reserve Bank staff have firmed in their view that increased demand by China for Australian raw materials reflected an economic rebound rather than speculative stockpiling.

Australia’s exports to China have hit record highs in each of the past three months, eclipsing exports to Japan.

The Reserve Bank believes that while there might be an element of speculation to these purchases, they are primarily driven by real and probably sustainable demand flowing from the Chinese Government’s stimulus program.

The bank expects the International Monetary Fund to revise up its outlook for China when it reports tomorrow.

At home the Reserve Bank is buoyed by confidence surveys suggesting a return to optimism among businesses and consumers and by some of the results from its business liaison program.

A Treasury report finds conditions in the mining sector better than had been expected and Australia’s retail and construction sectors “buoyant”.

However it finds manufacturing conditions mixed, with “those operating in the food and beverage sector or supplying lower value retailers generally enjoying relatively benign conditions” and “those engaged in the production of consumer durables and business plant and equipment less sanguine”.

But it says even among heavy manufacturers “several contacts believed the bottom of the current economic cycle may have been reached”.

Financial markets expect the Reserve to keep rates on hold today for the third consecutive month, but expect at least one further cut by the end of the year.

http://business.smh.com.au/business/big-chill-reserve-set-to-ignore-signs-of-a-hiring-freeze-20090706-dagt.html?sssdmh=dm16.385545

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July 3, 2009 – 6:59AM

The unemployment rate in the 16 euro countries climbed to a 10-year high of 9.5 per cent in May as companies cut jobs to survive Europe’s worst post-war recession, according to EU data on Thursday.

Some 273,000 jobs were lost across the eurozone in May as the unemployment rate rose to the highest point since May 1999, the European Union’s Eurostat data agency estimated.

“Deep and extended economic contraction, depressed business confidence and deteriorating profitability is pushing unemployment up sharply across the eurozone,” said economist Howard Archer at consultants IHS Global Insight.

Although activity in the recession-hit European economy is beginning to pick up, many companies are still shedding workers to adjust to slack demand for their goods and services in Europe and abroad.

The May eurozone unemployment rate was up from 9.3 per cent in April and 7.4 per cent in May 2008.

Meanwhile, in the 27-nation EU the unemployment rate rose in May to 8.9 per cent, hitting the highest level since June 2005 as 385,000 jobs were lost.

Eurostat estimated that in total 21.5 million people were unemployed across the EU in May, of which 15.0 million were in the euro area.

Looking ahead, Jennifer McKeown at research outfit Capital Economics said: “Survey measures of hiring intentions point to a further easing in the rate of job cuts to come.

“But given that labour market developments tend to lag behind those in the wider economy, unemployment almost certainly has considerably further to rise. We expect the rate to reach about 12 per cent next year,” she added.

Likewise, Archer predicted that economic activity would remain too fragile to begin generating more jobs than were being cut “until well into 2010,” with negative implications for the economy.

“Sharply higher, rising unemployment will weigh down on eurozone consumer spending, especially as it will be liable to lead to slowing wage growth,” he said.

A major headache for European politicians for decades, unemployment had been steadily falling ahead of the current downturn, reaching a record low of 7.2 per cent in March 2008.

However, with the rapid deterioration in the economy, the unemployment rate has steadily climbed higher since then.

June 11, 2009 – 6:52AM

Economists are expecting today’s official job figures for May to show a sharp jump in the unemployment rate.

The jobless rate is tipped to bounce back to at least 5.7 per cent, where it stood in March and prior to the questionable fall to 5.4 per cent in April.

Deputy Prime Minister Julia Gillard is sticking with the May budget forecast that sees the unemployment rate soaring to 8.5 per cent by mid-2011, leaving one million people in the dole queue.

On Wednesday, the Westpac-Melbourne Institute consumer sentiment index for June surged 12.7 per cent, the second largest increase since the survey began in 1974 and the largest increase in 22 years.

The national accounts – released last week – showed gross domestic product (GDP) grew by 0.4 per cent in the first three months of the year.

The economy thus avoided a second straight quarter of negative growth, which would have meant it was in a technical recession.

http://business.theage.com.au/business/brace-for-unemployment-rise-20090611-c3v6.html

Jacob Saulwick
May 15, 2009

JOBLESSNESS in the inner city is already approaching 10 per cent, while working hours are also falling as recession eats into working conditions.

Detailed labour force figures released yesterday by the Bureau of Statistics show the uneven spread of job losses throughout Sydney and NSW.

In the inner city, for example, the number of unemployed has more than doubled since the end of last year – from 15,800 in December to 31,900 in April.

The figures are sketchy – the bureau urges caution because of small sample sizes – but trends are emerging in the geographic sweep of joblessness.

The unemployment rate in inner Sydney and in the inner west increased every month from the end of last year, from 4.6 per cent in December to 9 per cent in April. For men in the area, unemployment has hit 12 per cent, while the female rate is about 6 per cent. For most of last year unemployment in the region was closer to 4 per cent.

Sydney, with the nation’s highest concentration of finance sector workers, has been an early victim of the downturn. But while finance companies have been steadily laying off staff for the best part of a year, it is only in recent months that rising unemployment has started to emerge in official figures.

Outer suburbs – Fairfield, Bankstown, north-west Sydney – have had higher unemployment in the past couple of years. But they have not had the same level of increase since the financial crisis escalated last September.

Yesterday’s report provides more detail than the Bureau’s release last week, which showed the national unemployment rate dropping from 5.7 per cent to 5.4 per cent, and NSW unemployment falling from 6.8 per cent to 6 per cent.

The report also showed employees have started to work shorter hours, typically a precursor to rising joblessness. For the first time since figures were collected eight years ago, the average male working week dropped below 41 hours. For females, it dropped less sharply, to 31 hours.

The report comes as a range of indicators point to improvements in economic confidence.

A consumer confidence index compiled by Roy Morgan rose more than seven points last month to 104.5, and is now seven points higher than a year ago.

Some 38 per cent of Australians – 5 per cent more than the previous month – expected their family to be “better off financially” by the same time next year. Only 17 per cent – a fall of 5 per cent – expected to be worse off, the survey, conducted before the budget, showed.

A separate report from the Bureau of Statistics highlighted emerging strength in the first-home market, with housing finance increasing 7.3 per cent in March. And loans to build new homes have increased by more than 40 per cent in the past seven months, spurred on by the $21,000 government grant.

The success of the first-home owner’s grant has raised hopes Australia will avoid the precipitous falls in home prices that have hit the US and Britain.

But a Royal Bank of Scotland economist, Kieran Davies, warned that lower interest rates and limited new housing supply might not support house prices in the coming year.

“House price dynamics can develop a life of their own … Prices may fall further independently of what happens to unemployment,” he said.

http://www.smh.com.au/national/jobless-rate-doubles-in-innercity-sydney-20090514-b4ti.html?page=-1

By Malcolm Farr

May 14, 2009 12:01am

THE Federal Government is bracing for thousands of unemployed people trying to switch from the dole to the higher-paying disability allowance as the nation’s jobless figures soar, The Daily Telegraph reports.

Close to one million people will be out of work within two years, putting enormous strain on welfare.

Budget forecasts warned that by 2011 there would be about 900,000 jobless – 8.5 per cent of a workforce of about 10 million.

Coal mining unions yesterday said a further 100,000 industry jobs would be at risk if the proposed emissions trading scheme went ahead in 2011.

Despite the growing numbers and the possibility some people would be out of work for years, the Government did not deliver a Budget increase to the dole, known as the Newstart Allowance.

The single Disability Support Pension is worth $106 a week more than the single dole and the Government has made it easier to apply for.

The Budget promised $7.4 million to “provide increased assistance to new entrants” with “enhanced information and support services”.

Welfare groups said the long-term unemployed – including 300,000 at present who already have been out of work for more than two years – would make medical claims to get on the disability payment.

This could add millions of dollars to the welfare bill.

In Parliament, Shadow Treasurer Joe Hockey dismissed Government claims that the economic stimulus packages prevented the jobless rate going to 10 per cent.

“Isn’t it great we’ve only got 8.5 per cent unemployment? Isn’t it fantastic we’ve done so well. It could have been 10 per cent,” Mr Hockey said mockingly.

“It was 4 per cent 18 months ago and Labor is taking pride in one million being unemployed.”

And Labor’s western Sydney MP Julia Irwin, whose seat of Fowler recorded 11 per cent unemployment in January, agreed.

“I’m a bit disappointed as a Labor member that there wasn’t much in the Budget for the unemployed,” she said yesterday.

“I would have liked to have seen more in benefits for the unemployed. We’re looking at one million people over the next, probably, 12 months.”

Treasurer Wayne Swan rejected claims the Government had been harsh towards the unemployed and took a personal approach to the issue.

“I’ve spent my whole life in politics squarely focused on what we must do to ensure that all Australians have dignity in employment,” he told a National Press Club lunch.

Mr Swan said the Government had “fought for those who are retrenched or might become unemployed”, including allowances for additional training.

“There are people in my (Brisbane) community who have lost their jobs and the personal experiences that come with that impacts on family, impact on local communities and impact ultimately on the social and economic life of the nation,” he said.

“It’s something that goes to the very core of why I’m in politics.”

The Australian Manufacturing Workers Union said unemployment benefits should have been raised in line with the pension increase.

“There are going to be lots of regions that will have 10 per cent unemployment,” union economic adviser Nixon Apple said.

A coalition of welfare groups – including the Australian Council of Social Service, St Vincent de Paul and Salvation Army – called on the Government to raise welfare benefits.

http://www.news.com.au/dailytelegraph/story/0,22049,25479097-5005941,00.html