Unemployment: Limping, not leaping, higher
Labour market
The number of job seekers receiving unemployment benefits rose modestly in December from near record lows.
Figures provided by the Department of Education, Employment and Workplace Relations show that there were 317,394 job seekers in December, up by just 15,367 people (5 per cent) on a year ago. CommSec has calculated seasonally adjusted figures, estimating that the dole queue has lengthened for the past five months.
Based on the data on unemployment beneficiaries, CommSec estimates that the core jobless rate currently stands at 2.8 per cent – just up of the record low of 2.5 per cent set in September.
What does it all mean?
Contrary to the view of the more gloomy economists, the jobless rate is only limping, rather than leaping higher. In December just over 317,000 people were filing for unemployment benefits, up by just over 15,000 over the past year, and in line with broader estimates produced by the Bureau of Statistics.
Despite all the noises, there is still no hard evidence about a sharp rise in the jobless rate. The number of people filing for dole payments is only modestly above the record low set in September and half the level recorded nine years ago.
While the dole queue is poised to rise in coming months as hiring levels continue to slow, employers are unlikely to engage in major job shedding. Businesses fought hard to get good staff on their payrolls and they certainly won’t let them go lightly. Overall, unemployment will probably drift, rather than surge, higher over the coming year.
The Bureau of Statistics estimates that the unemployment rate stands at 4.5 per cent. But using data on dole recipients, CommSec estimates that the core jobless rate is far lower at 2.8 per cent. Over 2009 the unemployment rate is expected to drift up to 5.5-5.75 per cent with the core rate lifting to just under 4 per cent.
While the size of the dole queue has only risen modestly to date, the data bears close watching over coming months. Unlike the Bureau of Statistics data, the Centrelink data measures the actual number of people filing for unemployment benefits, accurately measuring the core level of unemployment.
If the dole queue starts to widen markedly, the Reserve Bank and Federal Government will need to be responsive with fresh stimulus to the economy.
What do the figures show?
The number of jobseekers filing for either Newstart or Youth Allowance recorded the usual seasonal lift in
The number of unemployment beneficiaries is up by 15,367 people or 5.0 per cent on a year ago.
CommSec estimates that the number of dole recipients has risen for the past five months in seasonally adjusted terms, lifting by 8,325 people or 2.7 per cent in December to 316,977 people.
Using the data on unemployment beneficiaries, CommSec estimates that the jobless rate would have stood at 2.8 per cent in December – modestly above the record low of 2.5 per cent set in February.
At its height in February 1994 almost 1 million people were receiving unemployment benefits (977,800 people). The current dole queue is less than a third of the record level.
What is the importance of the economic data?
The Department of Education, Employment and Workplace Relations (DEEWR) releases statistical information for the various types of labour market payments delivered by Centrelink. The “Labour Market and Related Payments Monthly Profile” publication covers Newstart Allowance, Youth Allowance, Mature Age Allowance,
The DEEWR data provides an alternate guide on unemployment compared with the monthly data from the Bureau of Statistics. Less people filing for unemployment benefits signifies a tighter job market, pointing to higher demand for retail goods, homes and cars.
What are the implications for interest rates and investors?
The dole queue is modestly expanding, but from generational lows. Still, it is something the authorities will watch over 2009.
The mining states of Western Australia and Queensland will most likely see most job losses in coming months
Craig James - Chief Economist (Author)
(612) 9312 0265 (work)
Produced by Commonwealth Research based on information available at the time of publishing. We believe that the information in this report is correct and
any opinions, conclusions or recommendations are reasonably held or made as at the time of its compilation, but no warranty is made as to accuracy, reliability or
completeness. To the extent permitted by law, neither Commonwealth Bank of Australia ABN 48 123 123 124 nor any of its subsidiaries accept liability to any person for
loss or damage arising from the use of this report.
The report has been prepared without taking account of the objectives, financial situation or needs of any particular individual. For this reason, any individual should,
before acting on the information in this report, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs
and, if necessary, seek appropriate professional advice. In the case of certain securities Commonwealth Bank of Australia is or may be the only market maker.
This report is approved and distributed in Australia by Commonwealth Securities Limited ABN 60 067 254 399 a wholly owned but not guaranteed subsidiary of
Commonwealth Bank of Australia. This report is approved and distributed in the UK by Commonwealth Bank of Australia incorporated in Australia with limited liability.
Registered in England No. BR250 and regulated in the UK by the Financial Services Authority (FSA). This report does not purport to be a complete statement or
summary. For the purpose of the FSA rules, this report and related services are not intended for private customers and are not available to them.
Commonwealth Bank of Australia and its subsidiaries have effected or may effect transactions for their own account in any investments or related investments referred to
in this report.