15/01/2009 - 09:44

WA jobless rate falls in December

15/01/2009 - 09:44

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The effect of the global financial crisis is expected to become evident in coming months as Western Australia's December unemployment rate falls to a seasonally adjusted 2.8 per cent.

The effect of the global financial crisis is expected to become evident in coming months as Western Australia's December unemployment rate falls to a seasonally adjusted 2.8 per cent.

Latest data from the Australian Bureau of Statistics showed that the total number of Western Australians unemployed fell from November's 35,900, seasonally adjusted, to 34,500.

WA's November jobless rate was a seasonally adjusted 3 per cent.

Some 844,600 Western Australians were recorded to have full time positions in December, down from the previous month's 847,300.

Chamber of Commerce and Industry WA chief economist John Nicolau said that the latest jobless rate highlights the state's strong conditions for employment, with the participation rate climbing to a record 69.3 per cent.

"The latest labour force information highlights the fact that the labour market conditions remain quite tight and that's consistent by the views held by CCI's membership, where over 40 per cent say labour is still scarce," Mr Nicolau said.

"Looking behind the figures, it does show there has been some changes in the overall nature of the labour force with full time employment coming back a bit over the course of the last quarter of last year but that was offset by increased part time employment.

"What that does suggest is that there are moves afoot to scale back hours of employees where the impact of the global financial crisis on certain companies."

Mr Nicolau said the latest data is a lagged indicator of employment figures and the true extent of the global financial crisis will be seen in coming months.

The CCI predicts the state's jobless rate to remain at current levels and perhaps increasing slightly later in this financial year, he said.

Meantime the string of job casualties in the mining sector over the past few months were overshadowed by an increase of 1700 workers in the industry over the September quarter, Mr Nicolau said.

In addition, employment in the retailing sector in WA grew by 6000 people, transport and storage was up by 7500, and the health sector recorded an increase of 5000 people.

Conversely, the manufacturing workforce decreased by over 7000 workers during the same period and the property and business services sector dropped 9000 workers.

Nationally, the December unemployment rate was largely unchanged from November's 4.4 per cent, seasonally adjusted, rising to 4.5 per cent

Total employment falling by 1200 to 10.742 million.

Full-time employment fell by 43,900 to 7.640 million and part-time employment was up 42,800 to 3.102 million.

The participation rate in December was 65.0 per cent, compared with 65.1 per cent in November.

Economists had expected total employment to decline by 20,000, a jobless rate of 4.5 per cent and a participation rate of 65.0 per cent.

CommSec economist Savanth Sebastian said the December figures showed the Australian economy was "not immune from what is going on overseas".

He described the 43,900 fall in full-time employment as a "big concern".

"There's no doubt that employers at the moment are certainly not hiring any new staff and whatever staff they currently have on board they are moving to a much more flexible workforce," Mr Sebastian said.

"Cost-cutting is certainly in vogue."

Mr Sebastian said he expected the RBA to cut the cash rate by 50 basis points at its February meeting.

"For the government and for the Reserve Bank it is a matter of maintaining a strong stimulus stance," he said.

He said the federal government needed to add further fiscal stimulus to support the local economy.

The RBA lowered the cash rate, which sits at 4.25 per cent, by a combined 300 basis points over the final four months of 2008.

The Australian economy had held up well compared with major economies such as Japan, the United States and United Kingdom, which have all slipped into recession.

The US unemployment rate jumped to a 15-year high of 7.2 per cent in December, when the world's largest economy shed 524,000 jobs.

Mr Sebastian said he expected the Australian unemployment rate to rise to six per cent in a year's time, but the move would be more gradual than the US experience.

"The fundamentals here are far different," Mr Sebastian said.

"It's likely that it's going to be a virtual crawl in the unemployment rate.

"It's going to be a steady and controlled rise and we're certainly not in the camp that we're expecting a recession.

"We've already seen that it's taken almost a year to get from the lows of 3.9 per cent to 4.5 per cent."

An ANZ survey out this week showed the fall in the number of job advertisements in Australia accelerated in December.

Newspaper job ads had more than halved in the 12 months to December which was "historically consistent with economic recession within the next nine months".

Major companies such as Rio Tinto, ANZ Banking Group, Fairfax Media, Telstra Corporation and Qantas Airways have all recently confirmed plans to shed staff.

The Australian dollar reacted positively to the news.

The local currency rose from $US0.6598 shortly before the data was released at 1130 AEDT to $US0.6624 shortly afterwards, but had started to drift back slightly approaching 1200 AEDT.

ICAP senior economist Adam Carr said the labour market appeared to be holding up well.

"A deterioration in the labour market has been on the cards for sometime," Mr Carr said in a research note.

"The fact that it is occurring more slowly than forecast, with average growth of 2,000 over the last four months, can only be a good thing.

"Looking forward, I still believe this downturn will be characterised more so by an absence of job creation rather than mass job shedding."

Mr Carr said he expected the RBA to cut the cash rate by at least 50 basis points in February despite improved local retail sales and home loan figures out recently.

"I suspect given the global backdrop the RBA will pull the trigger again (with) least 50 basis points, with history telling us that 75 to 100 is a strong possibility," Mr Carr said.

Kinetic Securities chief economist Clifford Bennett said the December jobs report was a "good outcome in this global downturn environment".

"The Australian employment data points clearly to a soft landing, perhaps the softest landing of the western economies," Mr Bennett said in a research note.

"This perfectly fits with our forecast that retail sales and consumer behavior in general is holding up far better than the market has been expecting," Mr Bennett said.

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