Employment edged up 42,700 in November following a period over the last three months where employment had fallen by a cumulative 8,500. The monthly seasonally adjusted numbers remain choppy, but regardless, it must be said the labour market remains very weak.
So weak in fact that the unemployment rate has risen to 6.3 per cent – the highest rate since 2002. With the various job ads series struggling to gain any semblance of strength, the labour market is likely to deteriorate further over the medium term with a 6.5 per cent unemployment rate now baked in the cake and 7 per cent not out of the question as the economy splutters along.
Don’t forget that the prior labour market weakness conspired to drive wages growth to a rate never before seen in Australia. The recent public sector wages claims suggests wages will fall further in 2015 which is dreadful news for consumer spending, confidence, growth and jobs. Deflationary pressures are not nice for an economy.
Today’s labour force data, taken with the recent news on consumer sentiment, business confidence, commodity prices, building approvals, government demand and household consumption are screaming for an interest rate cut or two or three or four.
Lower interest rates are increasingly being locked in for early 2015 and it seems that more than 50 basis points of rate cuts from the current 2.5 per cent will be needed before we see the unemployment rate anywhere near where it should be – at 5 per cent or less.