One of the biggest signs of a troubled economy, is that of rising unemployment.
While, Australia’s unemployment rate is probably one of the healthiest in the world, there’s signs it’s about to get worse.
Just before lunch time today, we’ll get the official labour force numbers. Currently, our jobless rate stands at 5.3%.
But job advertisement numbers by ANZ earlier this week, showed a decline in the number of newspaper and online job ads. The decline was so concerning, that economists at ANZ revised their unemployment expectations upwards, predicting that we’ll see a rate of 5.5% by the middle of this year.
Then there’s those widely reported job losses in the financial sector, which I pointed out on MEMO>ricardo last week. ANZ has confirmed that it’s on a job cutting mission, slashing around 130 positions earlier this week, and now there’s reports Westpac is looking to let go of 600 staff this year.
Yesterday, the World Bank threw more wood into the fire, warning the world may enter a recessionary period worse than that of 2008. The body cut its estimates for global growth, including that of China’s.
China is still one of Australia’s most important trading partners, and any slowdown in its economy is bad news for us. The World Bank is predicting China’s economy will slow to 8.4 per cent in 2012, down from 9.1 per cent this year.
While slow, it’s still one of the strongest in the world, and is growing at three times the speed of Australia.
This type of number puts things in perspective. There still is some good news out there and I often wonder, if this bleak picture that is being painted, really is as bad as some are making it out to be.
Even if the unemployment rate does rise, Australia has one key instrument to deal with that…. interest rates. Because our official cash rate is still high in global terms, the Reserve Bank has plenty of leeway to cut to stimulate the economy domestically.