Jobless rate jump - did the RBA know?
DateOctober 11, 2012 - 12:40PM
Michael Pascoe

The first question that might spring to mind upon reading that the seasonally adjusted unemployment rate jumped to 5.4 per cent last month is: Did the RBA already know when it cut rates last week?

The second question might be: how credible are the inevitable scary headlines generated by the number given the apparent contradictions within today’s statistics?

Just dealing with the flighty seasonally adjusted figures first (only because they’re the ones most of the commentary runs on), the immediate paradox is a sharp rise in the unemployment rate and the number of unemployed (38,800) despite a lift in aggregate hours worked, a strong rise in full-time employment of 32,100 and a not-too-shabby increase in overall employment of 14,500.


The number of employed persons has risen over the last decade.
The easy answer is a 0.2 rise in the participation rate to 65.2 per cent, but that’s just a mathematical outcome. Noting that the labour force jumped by 53,400 last month begins to tell us something more.

I can’t prove it, but my suspicion is that we’re starting the see the impact of rather sharply rising net overseas migration pushing up our population growth rate again.

The key reason for the unemployment rate remaining steady this year despite a soft labour market has been demographic – the working age population hasn’t been doing much either, as explained in the excellent speech by RBA deputy governor Philip Lowe on Tuesday. Net overseas migration running at close to 25 per cent above last year’s numbers ends up making all sorts of differences.

Lowe’s speech was amazing timing – a considered, calming view of our labour market just two days before the a headline-grabbing rise in unemployment.

But before running away with the headlines, it’s also worth remembering that these are the seasonally adjusted numbers – the ones that often jump around, don’t mean all that much on a monthly basis and have proven utterly unforecastable.

Unfortunately, the ABS trend series can tell a worse story despite offering a lower unemployment rate of 5.3 per cent – statistics are like that.

The August trend series unemployment was revised up from 5.2 to 5.3 per cent, meaning no growth in the unemployment rate in September and the participation rate remained steady for another month on 65.2 per cent.

However, the trend numbers found no growth in employment, just a marginal loss of 1,000 jobs and a rise in the number of the unemployed of 5,500. Again it can only be my supposition, but maybe the trend series isn’t capturing the population growth impact yet.

Inevitably the rise in the headline rate will increase the noise about further interest rate cuts, but the trend series still says nothing much has changed. The RBA has been describing the unemployment rate as “five-and-a-quarter” per cent for most of this year and that’s pretty much still the story.

The labour market remains soft and has softened a bit more. As Philip Lowe pointed to on Tuesday, all those public sector jobs being lost and the weaker manufacturing sector will out. But as Lowe also instructed, our labour market has functioned and continues to function rather better than anyone might have expected. And in the global context, the market isn’t soft at all.

It has been the official family’s forecast for the unemployment rate to tick up this financial year – now the question is how tolerant the RBA will be about seeing its forecast be proven correct, compared with the amount of action it might take to prevent that, to keep the rate closer to 5.25 per cent.

With Canberra’s only bi-partisan agreement being to run contractionary fiscal policy is search of a budget surplus and state governments all hitting fiscal walls, the RBA has become the labour market’s sole parent.

Michael Pascoe is a BusinessDay contributing editor.



Read more: http://www.theage.com.au/business/the-economy/jobless-rate-jump--did-the-rba-know-20121011-27epn.html#ixzz28ydrdUOH

thank you........ tell me what the chinese expect us to pay off our loans with monopoly money, or do we just crank up the xerox?????

The RBA don't just continually print money off a conveyor belt creating and endless supply, that's madness and you're correct it would create hyper-inflation. When the government needs a loan the RBA will supply it to the government with interest. The money is backed by us the people and our future generations (tax). A government bond is basically an IOU. It is not a conspiracy because it is done with our full knowledge.

Make of this what you will.

Here is 10 minutes of your life you'll never get back...

[youtube]eWl7Mb49vSk[/youtube]

Edited by leftrightout: 11/10/2012 10:56:25 AM

Swan says he should have condemned joke


Friday, October 12, 2012

Treasurer Wayne Swan says he should have told organisers of an union function that an offensive joke about Opposition Leader Tony Abbott and his female chief of staff was out of line and shouldn't have been said.

Mr Swan was the guest speaker at the dinner for the Construction Forestry Mining and Energy Union (CFMEU) in Parliament House on Wednesday night.

The joke involving Mr Abbott's chief of staff Peta Credlin was told during a comedy routine at the dinner and was met with stunned silence.

It followed Prime Minister Julia Gillard's accusations in parliament of the opposition leader being sexist and a misogynist.

It was inserted into the routine at the last minute by the Manic Studios writing team for the comedian, who works under the stage name Allan Billison.

"I didn't want to give it oxygen last night, I didn't want to give an airing last night," Mr Swan told ABC television on Thursday.

"In retrospect it would have been better if I did.

"As I was the guest speaker, I was actually concentrating on my remarks."

Mr Swan said the joke was "completely out of order" and it should not have been made.

"I conveyed that view to the organisers this morning," he said.

The treasurer said he couldn't believe it had been said.

"I was actually quite shocked at what he said," Mr Swan said.

"I didn't want to give it a further airing in the open dinner."

Trade Minister Craig Emerson said he left the dinner after the comments were made.

The issue of sexism has been one of the main topics in parliament this week.

Ms Gillard attacked Mr Abbott on Tuesday after he moved a motion declaring Peter Slipper unfit to hold the office of Speaker and should be sacked for the content of a text message sent to staff James Ashby comparing female genitalia to mussels.

what loans? we dont have any "loans" with china. in fact, we have a trade surplus with them, and have had that for ages.

China, like many other countries, has a huge demand for treasurys. australia is seen as a safe, high return investment, so foreigners are snapping up our bonds. but we dont have any "loans" with china

you should educate yourself before you type nonsense and make yourself look like an idiot

shit son you just got taken to school by a bogan north queenslander that's gotta be a bad time for ya

LOL....ok we have "debt" with china....and stop playing the twist and turn the truth card by using slight of hand comments and explanations......

also you lose all credibility when you start personally abusing me......

if your theories are right explain the following

why dont we all stop work and get the aussie government to print money like you say they can?
why bother with tax?
why even worry about international trade?
why bother with inflation rates? or interest rates??
we should just crank up the printing press and start distributing the cash....ye har.....

and the answer to you mightier than thou opinion of yourself is in your own post if you choose to admit it......

persannally i think she is a cruel heartless bitch, a liar,a man hating dyke but none of that matters when we are looking at her track record whish is strewn with failure lies and carnage

China, like many other countries, has a huge demand for treasurys. australia is seen as a safe, high return investment, so foreigners are snapping up our bonds. but we dont have any "loans" with china

What a bright little ray of sunshine you are.

I also noticed, Hoff, that you completely skipped over my Zimbabwe example of what happens when a Government just prints endless supplies of money... A quick reminder, if you print endless supplies of money, then you flood the market with Australian Dollars, simple supply and demand means that the value of the Australian dollar will plummet, meaning that people not just internationally, but even domestically, will refuse to accept the Australian dollar, meaning that both the Government and individuals will have to trade using foreign currency, which the Australian treasury can NOT simply print more of, meaning that you have actually not created any more money at all, you have only succeeded in destroying your own currency.

Ever wondered why in the finance report at the end of the 6 o'clock news the value of international currency constantly fluctuates?

Fuck me...

I think Australia is a little better managed than Zimbabwe. The RBA only lends to the government when it NEEDS a loan. You are attacking Hoff as if he has stated that the money is just printed and put into circulation on a constant basis. A government bond is an IOU to the reserve bank. It's a security that the citizens will pay back to the government for the government to cover the loan. So it is a fiat currency back by people and the services we supply.

Nobody said that RBA is printing an endless supply of money. though money is printed out of nothing but bonds backed by us and the labour of our future generations. All countries with a central bank are in debt it's just comes down to how well that debt is managed.

As someone who has actually studied finance at uni, the last few pages of this thread makes me physically ill.

Finance != Economics

Jus' sayin.

-PB

leftrightout, he did say, quite clearly, that debt was ficticious and that whenever the government needs more money, they can simply print more. THAT is what I was attacking.

and a Government bond is not an IOU to the reserve bank at all! And the citizens do not pay it back to the Government!! Your totally on the wrong track here, The GOVERNMENT sells the bond, and then the GOVERNMENT repays the bond!

Here is an overview of a government bond as some people in this thread clearly do not know what one is. A government bond is issued by a Government as a vehicle to raise money. They sell bonds to anyone who wants to buy them, for example lets say a $1,000 5 year bond at 4% interest. By selling that bond, the Government has raised $1,000 to spend on whatever they like. At the end of 5 years, the Government must repay the investor that $1,000. On top of this, the Government must also make quarterly interest payments to the investor.

It's exactly the same as an interest only loan.

Now where this all falls apart is in cases like Greece, where they do not have the money to repay their bonds! As a result, the EU has had to give hundreds of billions of dollars to Greece so that they can repay their bonds, thus creating a rather large clusterfuck that no amount of money printing will fix...

Edited by RJL25: 12/10/2012 06:27:39 PM

Quite obviously, you can not study finance at uni, without also doing subjects on local and global economies.

Your degree would be pretty worthless if it didn't cover these topics...

Also, how a bond works was covered at high school, jus' sayin.

A bond is a bloody loan, you fool! It's just structured differently, Governments don't go to a bank and ask for a mortgage or a loan, they go to the market and offer up bonds. But the principal is exactly the same, people buy the bonds on a 5, 10, 20 or whatever year term, at the end of which the GOVERNMENT HAS TO PAY IT BACK! Plus they have to pay interest along the way.

A bond = a loan

If your going to accuse people of lacking education, then for fuck sake make sure you know what your bloody talking about!

leftrightout, he did say, quite clearly, that debt was ficticious and that whenever the government needs more money, they can simply print more. THAT is what I was attacking.

and a Government bond is not an IOU to the reserve bank at all! And the citizens do not pay it back to the Government!! Your totally on the wrong track here, The GOVERNMENT sells the bond, and then the GOVERNMENT repays the bond!

Here is an overview of a government bond as some people in this thread clearly do not know what one is. A government bond is issued by a Government as a vehicle to raise money. They sell bonds to anyone who wants to buy them, for example lets say a $1,000 5 year bond at 4% interest. By selling that bond, the Government has raised $1,000 to spend on whatever they like. At the end of 5 years, the Government must repay the investor that $1,000. On top of this, the Government must also make quarterly interest payments to the investor.

It's exactly the same as an interest only loan.

Now where this all falls apart is in cases like Greece, where they do not have the money to repay their bonds! As a result, the EU has had to give hundreds of billions of dollars to Greece so that they can repay their bonds, thus creating a rather large clusterfuck that no amount of money printing will fix...

Edited by RJL25: 12/10/2012 06:27:39 PM

lol doing some subjects as part of your degree != a whole degree on it.

It covers basics sure but not the itty gritty.

Think you mistook my post as a troll post which it was not.

-PB

Hoff - I mistook you on this subject, you clearly do have some knowledge of what your talking about which is good, however your core point that the RBA can simply print money to get around its debt obligations should it fall short of money is incredibly simplistic. My brain hurts too much at 12am to consider if what your saying in technically correct or not, but certainly the practicalities of it simply would not work, as the devaluation of the AUD would be so great that in all manner of ways it would create more problems then it would solve.

Ironically, I think it's you on this occasion who is relying too much on textbook definitions rather then the broader real world implications of what your arguing. Kind of like arguing that the Efficient Market Theory is accurate in the real world, wouldn't you say?

Also, anyone else notice that "Hoff" appeared pretty much straight after ozboy cracked the shits and declared he wouldn't come back anymore? All the traits are the same, excessive use of academic terms to create the illusion of academic achievements, the questioning of the educational standards of those who disagree. Hmmmmm...

Edited by RJL25: 13/10/2012 01:13:53 AM