Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Saturday, 18 March 2017

The glass half...

Jobs to turn a corner?

A bit of water has flowed under the bridge since the February jobs figures were out.

There seem to be two prevailing viewpoints.

Firstly, there is the view that the weak numbers were a monthly blip, and other indicators such as surveys for business conditions and job advertisements suggest a stronger year ahead for hiring.

It's a plausible argument, and you might even argue that the trend for annual employment growth has already turned a corner, with full time employment faring better lately too. 

The counter-argument is simply that taken at face value February was a bad result portending weakness in the economy. 

One might add to that, almost all of the jobs created over the past year have been located in Melbourne, with Sydney rolling over after a strong run, and the resources states still unravelling as construction activity falls away. 

More hours, please

One of the reasons that rate hikes could be further away than a lot of people seem to think is that beneath the surface the employment figures do suggest plenty of spare capacity, even on top of an uncomfortably high unemployment rate of 5.9 per cent. 

The youth unemployment figures are weak enough, and as I already looked at previously, the underutilisation rate for 25 to 34 year olds is dire

Meanwhile, underemployment as a proportion of the employed is higher across every state and territory than we saw in the lead up to the financial crisis, which in part explains weak wages growth. 

Moreover, the question mark looming over all of the above numbers is how far construction employment will fall over the next couple of years.