New reports say the Australian Economy lost 27,000 jobs last month. The number of jobs lost was significantly worse than 10,000 analysts predicted. According to AMP chief economist Shane Oliver, full-time employment has been “stagnant” since January and that market evidence pointed toward more “softness” ahead.1
Prime Minister Gillard tried to soften the blow by telling reporters, “By the standards of the world we continue to have a low unemployment rate.”1
Indeed Australia’s current 5.2 unemployment looks rosy compared to 8.2 in the U.S. and the U.K., and 11.1 in the Eurozone.2
Looking at these latest unemployment numbers closely, however, reveals a more distressing trend: Most of these most recent jobs lost were full-time positions. The economy actually lost some 33,500 full-time jobs in June, while adding about 6500 part-time positions, to make up the 27,000 job loss figure.2
Replacement of full-time positions with part-time ones has become a source of worry for rich nations, as the middle-class job market seems to erode more each year.3 And Australia is not immune to the trend. The Internet is rife with speculation that the age of the middle class is coming to an end.4
Job Growth Vs. Loss
The economy added about 47,400 jobs for the fiscal year, but June’s job losses represent—as Michael Blythe put it in The Age—the year’s impressive job numbers “coming to a screeching halt.”2
The impact of unemployment on lives, of course, is immense. Generation Y households have an average of $7789 in their savings accounts.5 which doesn’t last long with mortgage payments due. When faced with a job loss, workers sometimes apply for an online cash advance in the short-term, but face real difficulties if new employment cannot be found quickly.
June’s job losses have prompted many to speculate on another round of interest cuts by the Reserve Bank. Following two rounds of cuts already (50 basis points in May and 25 points in June), the Reserve Bank may be reluctant to cut the interest rate any deeper.6
The saving grace of the Australian economy continues to be the mining industry. In June, mining states in Western Australia and Queensland actually saw a drop in unemployment, from 3.8 to 3.5 percent and 5.7 to 5.3 percent respectively.5 Australian mining now accounts for about 7 percent of the economy (roughly double it’s economic share in 2000).7 And China’s demand for resources remains strong—making the industry hopeful that prices for mineral exports will remain high.6 But the truth seems clear: Much of the rest of the Australian economy is hurting. Some have termed the dilemma Australia’s “two-speed economy,” with mining driving economic growth, while other sectors struggle.8
The central bank lowered its growth forecast back in May—June’s job losses may reflect the many factors that prompted those projections finally coming to bare.9 For now at least, Australia can take solace in the fact that, despite lower economic numbers, it is still the jewel of the world economy. Right now, that may seem a little like being the prettiest pig in the sty.