Okay – so here’s the puzzle.
Do consumers, households and business focus on the fact that employment just boomed 42,700 in November beating all forecasts and taking the total number of employed Australians to a new all-time high of 11,613,900?
Or, do they focus on the fact that unemployment just increased to a 6.3% rate which is the highest since 2002?
Speaking at a breakfast in Newcastle this morning and delivering the gloomy news about consumers at the moment, I said employment would fix everything as jobs growth continues in the economy, because it means more Australians working and more Australians taking home pay packets, even if the unemployment rate is rising.
But in the current mood that consumers are in, is that a reasonable argument to make? And if it is, why are consumers so gloomy?
There are some clues in the details below the headline number.
For all of the net 146,000 jobs that have been created in the past 12 months, hours worked is stagnating. This means workers are not working as much. In November hours worked fell 4.4 million hours or 0.3% even though jobs increased 42,700.
That’s important because workers know when they are getting less work than they might want (even at the margin) and it helps explain why Westpac-Melbourne Institute Unemployment Expectations Index, released yesterday with the consumer sentiment survey, increased 4.5% as employees worry about their jobs.
The other thing to note is that as the population increases, as unemployment rises – and there are physically more unemployed people around – even with all the jobs being created the employment-to-population ratio continues to fall.
As a result a larger number of people who see the world, and the economy, as a glass half empty – not half full.
So back to the original question.
Will the public focus on employment or the unemployment rate and can the Jingle Boom in employment fix weak sentiment?
The answer is yes, as long as some other key factors line up – recent political instability giving way to stability, the Aussie dollar continuing to fall, and the RBA at least hinting at cutting rates.
These are great numbers – enjoy them.