This Thursday sees the release of the January labour force data. We will see the update on a wide range of labour force measures including for unemployment.
In December, the unemployment rate stood at 5.82 per cent, which was the highest unemployment rate since January 2016. It was a poor result and reflects the ongoing sluggishness in the economy. The RBA, curiously and without much attention to the hard data, concluded in its regular Statement on Monetary Policy that the labour market was poised to improve. Who knows, it might turn out to be accurate. If so, terrific! The improvement must start now for the RBA to validate is upbeat stance and recent reluctance to cut interest rates.
If not and say the unemployment rate stays at 5.8 per cent or worse, rises, there will need to be a serious rethink about the current policy settings, including Australia having some of the highest interest rates in the industrialised world with an unemployment rate that is also above most non-European countries.
Let’s have a look at a few other facts on unemployment.
It is not since February 2013 that the unemployment rate has been below 5.5 per cent. Back then, this was considered high.
It’s not since 2011 that Australia had an unemployment rate below 5 per cent, a rate which is actually above the rate prevailing in the US, Germany, and Japan to name a few. The sub-5 per cent unemployment rate was considered to be something near full employment.
741,100 people were unemployed in December – that is a lot of people.
If the aim of economic policy management was to growth the economy at a speed and in a way that was to achieve a sustainable a low unemployment, recent policy makers has not done well.
Thursday’s January labour force data will give another update on how just how bad our policy makers have been.