The recent announcement of the 5.7% unemployment figure offers further evidence that the Australia’s economic outlook may not be as strong as previously thought and while many analysts are optimistic for the future, this coupled with a dollar falling in value will rightly make many nervous.
In November, there was a rise of over 39,000 people coming into full time employment with Queensland showing the biggest increase in new full-time workers. This surprised many as expectations had been just half that. The rise in employment from October to December was 0.1% with one senior economist suggesting that it was a direct result of more people seeking employment rather than those being put out of work. In line with this thinking, the participation rate, or the number of people available and able for work, rose from 64.4% in October to 64.6% in December. Interestingly Fintech, IT and Digital enterprises have recently been responsible for leading the way in terms of job creation.
Despite the rising figures of unemployment, the good news for Australia is that there are signs of full time jobs are being regularly created and the Australian Reserve Bank have indicated that should it continue, they will keep interest rates on hold until at least February. HSBC CEO Paul Bloxham adds that an improving job market should provide some support to the current sluggish pace of wage growth.
Outlook for 2017
There is a lot of confidence from economists going into 2017 when it comes to employment and the economy; Justin Smirk Senior Economist for Westpac Group states:
'That soft patch as we go into the new year is passing and we should be seeing employment match more what we've been seeing more from the business surveys, which are pointing towards jobs growth of around 1.8 to 2 percent per annum.’
There are also high hopes for a wage hike going into the new year to match production and growth, especially in industries based around natural resources. Rising prices in oil, iron-ore and coal should in theory therefore see money trickle down in accordance with efforts from the government and workers being rewarded with higher wages as well as create opportunities for commodity traders. National wage increase has been relatively slow during the past 18 months, slower than in the 3 years prior.
Additionally, the Australian real estate bubble looks to be showing no signs of bursting and construction and commercial development projects should also continue in the new year as a main source of job creation throughout the country.
Despite Australia’s heightened unemployment levels there does seem to be a lot of hope for the coming months and the coming new year as job production is still showing some very positive signs. The level of unemployment however is likely to negatively impact the dollar and see it slide even further making for some interesting results to be expected from Q4 and a turbulent outlook for 2017.