This week’s jobs data is a tiny ray of sunshine for the embattled Turnbull government, with the headline unemployment rate falling from 5.5 to 5.4 per cent.
Governments always take credit for that kind of good news, though as previously explained, that headline rate is often misleading and can mask underemployment.
A better measure of how the jobs market is growing is the ‘hours worked’ figure, and in particular the statistically smoothed ‘trend hours worked’ figure.
That measure saw some growth in the month of October, but the rate of growth slowed considerably from six months ago. It came in at 0.2 per cent for the month, whereas in May and June it was running at 0.4 per cent.
Still, taken over the past year, the number of hours of work in the economy has grown 3.1 per cent in trend terms, as the chart below shows. That’s twice the rate of growth of the workforce itself.
So more work is being created, as well as more jobs that will actually pay a typical household’s bills. Full-time jobs increased by 16,000 in October in trend terms, compared with only 4000 part-time jobs.
Economist Callum Pickering, who covers Asia-Pacific markets for jobs website Indeed.com, tells me “a bit of a lull was not unexpected in October given the strong jobs growth in the past year” but that the slower rates of jobs growth is “nothing to be concerned about”.
Most of Australia’s economic indicators are pointing towards more growth in the year ahead – especially a long-awaited uptick in business investment.
And just in time too – as shadow employment minister Brendan O’Connor pointed out on Thursday, there are 1.8 million Australians who are either unemployed or underemployed and looking for more hours.
Will it continue?
Overall, then, the jobs situation is much more promising than would have been expected even a year ago.
In 2016, many commentators, including this one, were expecting a harder landing to follow the end of the mining boom, the peaking of a residential construction boom, and a final shutdown of the auto manufacturing sector.
The October jobs figures suggest, after several months of similar figures, that the hard landing is being cushioned by job creation in other sectors.
No single factor accounts for this change in Australia’s fortunes, but a big turning point came with the election of Donald Trump to the US presidency a year ago.
As reported at the time global traders listened to Mr Trump’s self-contradictory acceptance speech and made the snap assessment that the worst aspects of his economic reform plans would be not be realised.
Global markets and global growth have responded better than nearly anyone was forecasting, with Australia benefiting mainly from stronger commodity prices and a lower Aussie dollar which has helped boost other exports.
And yet we’re not out of the woods, as assistant Reserver Bank governor Luci Ellis explained in a speech in Melbourne on Wednesday.
Ms Ellis is worried about a gloomy rump of commentators who still think Australia needs an new “engine of growth” to replace mining, rather than many smaller sources of growth.
She told an audience in Melbourne that at the end of the mining investment boom, “commentators started speaking of a growth ‘handover’: if mining investment wasn’t going to provide our growth, something else needed to”.
“The ‘engine of growth’ mindset also seems to divide industries into the worthy and the unworthy. Only ‘good growth’, we are told, is truly sustainable. And ‘good growth’, I can’t help noticing, always seems to be defined as ‘goods growth’. Services don’t count.”
What she is pointing to is a very simple fact: that workers who have found new jobs in tourism, education exports or health services aren’t interested in being told their pay packet comes from “bad growth”.
In her speech Ms Ellis asked: “… is it that they think jobs in service industries are all low-skill, low-wage jobs and therefore bad jobs? … Or do people genuinely think that it’s not really production if you can’t drop it on your foot?”
She makes an excellent point. It is the height of paternalism to tell Australian workers, tens of thousands of whom are enjoying spending pay packets for the first time in years, that somehow their jobs aren’t real.
The numbers don’t lie. Growth is returning to the economy, and absent a global shock there’s every chance that will continue.
As for the gloomier forecasts of 2016, we should all be glad they turned out to be so wrong.