Employment is up, particularly in Queensland and WA, as economists guess wrong

Well, aren’t all those economists just great at getting things right!  Employment rose by 44,000 in March, yet the dismal science predicted a drop in employment, with some economists guessing at job losses as high as 10,000 for March.  Most expected the unemployment rate to increase, and the talk was of a 0.5 percentage point fall in the cash rate next month.

Yet the ABS figures show a healthy mix in new jobs, with part-time jobs rising by 28,000 during March and full-time positions lifting by 16,000.  The jobless rate remained steady at 5.2%.  We even worked more hours in March and also over the last 12 months.

At first glance the latest employment figures are heartening. But the result needs to be put into perspective. The latest March result follows the modest fall in employment in February and a more sizeable fall December. In fact over the past five months employment growth has totalled just 36,400 positions – or around 7,000 jobs a month.  Yet it is still the case that an additional 44,000 workers now have jobs compared with a month ago.

In the current environment people are still more likely to be saving rather than spending. From a business perspective trading conditions will remain difficult, especially given the strength of the Aussie dollar and the mountain of government red (and green) tape. The federal election cannot come fast enough!

The March result suggests that businesses will hold onto current staff rather than adding to their workforce.

The yield curve suggests that the cash rate will drop by 0.25 percentage points in May, giving the banks some cover – i.e. don’t expect mortgage rates to drop much.  For mine – and this isn’t advice – we are at the bottom of the interest rate cycle.  I fixed my investment loans earlier this month for a five-year period.

Oh, and by the way the most jobs over the last 12 months were created in Western Australia (45,000), followed by 23,000 across Queensland.  Close to 23,000 positions were lost across Victoria over the last year.  South Australia lost 2,000 jobs and the was little change in the new jobs created across New South Wales during the 12 months to March 2012.

Three things drive the property cycle – confidence, supply versus demand and full-time job creation.  Perth has a slight oversupply of new stock.  In contrast the Queensland new housing market is under-supplied, jobs are being created and the state has a new government, which appears to be making the right moves to restore business and consumer confidence.

Michael Matusik is the director of independent property advisory Matusik Property Insights. Michael is a 25-year veteran in the industry and his firm has helped over 550 new residential developments come to fruition.  Michael has launched a new initiative, called Think Matusik.  Think Matusik brings together expert opinion and select property opportunities.