Thursday, November 19, 2009

Jobs, jobs and more jobs: CommSec Report

Dear InsideStory subscriber

We have run our Saturday InsideStory article off the back of this report, and the relivance of Jobs to property owners.

Have a read of my article to see the importance of this information. In a nut shell, no jobs, no confidence…No Confidence, no demand for property.



Important Information
The summary and attached 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.

Jobs, jobs and more jobs
Labour Force
· A solid increase in employment has put another rate hike a step closer. Employment rose by 24,500 in October. Part time jobs rose by 21,500 while full-time jobs rose by 2,900.
· The unemployment rate rose from 5.7 per cent to 5.8 per cent. CommSec expects the unemployment rate to peak at around 6 – a far better result than in previous downturns.
· Aggregate hours worked fell by 0.1 per cent in October and hours were down by just 1.4 per cent over the year.
What does it all mean?
· Australia is truly living up to its mantle as the wonder from down-under. Overall 24,500 jobs were created in October – a phenomenal result considering that in September the domestic labour market recorded the best job gains in two years.
· The latest round of employment data highlights the underlying resilience of the domestic labour market. And while the gains have been mostly in part-time employment, it is clearly encouraging, and suggests that full time employment should rebound in coming months as the economic recovery gains traction.
· Interestingly the unemployment rate has remained persistently sticky in recent months, hovering at just 5.8 per cent. As we have stated over the past few months the peak in unemployment is just around the corner. And the latest data has added more weight to that view. The jobless rate looks like peaking at around six per cent
· A key forward indicator that highlights the improvement in labour market conditions is that hours worked aren’t being cut to the same extent as earlier in the year. Also an important point to note is that not only is the jobless rate far lower than in previous downturns but the participation rate is far higher, even despite the marginal fall in the latest month. In other words more people are holding onto jobs compared with previous downturns.
· Last week’s Reserve Bank monetary policy statement hinted at the improvement in labour market conditions and the employment sub index in business survey earlier this week confirmed that business are back in the early stages of re-hiring. As the economic recovery improves and business capital expenditure plans are brought back, employers will have confidence to start hiring again.
· Importantly the improvement in job security will not be lost on consumers. Less fear about losing their jobs will no doubt see a pickup in retail spending and overall economic activity – in effect a self fulfilling prophecy and clearly another reason why the Reserve Bank believes that a return to trend growth is on the cards.
· It appears almost certain that the Reserve Bank will break tradition and raise rates for the third consecutive month in December. The Reserve Bank does have the option of not raising rates, however the data over the last couple of weeks has been surprising strong. Keep in mind that the Reserve Bank does not hold its next meeting till February, so it may just be that the central bank raises rates in December and takes a well deserved break over Christmas.

Anthony Toop, Managing Director.

© Toop Real Estate Group

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