The pessimism that abounded prior to the latest employment numbers is making a lot of people look stupid.
True the resources boom is ending and the uncompetitive industries of Victoria and NSW will continue to decline. But the numbers say the economy is fine.
The Age have an unusually detailed analysis of the data which means I don't need to spend much time on it. However look for:
Total employment
Percentage unemployment - and understand the definition - particularly how the workforce is defined
Look at the participation rate - why does this matter?
The state by state breakdown - why do states perform differently?
Monthly figures are volatile, don't expect a a similar rise in employment next time. But look at the TRENDS - it is difficult to avoid the conclusion that unemployment at 5.1% to 5.4% since last July is broadly stable.
As total employment has risen there must be steady growth too. (Remember with productivity increases around 1% growth is needed just to maintain employment.)
Thursday 14 March 2013
Saturday 2 March 2013
Operating monetary policy
I know this is not a subject anyone is studying at this point in the year, but Ross Gittins outlines how monetary policy works in today's Age.
Exactly how the Reserve Bank of Australia (RBA) controls interest rates is something you have to understand in Unit 4. Australia does this in a similar way to other countries, but has its own precise way of doing it.
Ross Gittins can write some really useful stuff and following his column is a good idea. (However sometimes he seems to get it off the back of a cereal packet so be careful!)
I have one argument with Gittins assertion that the RBA is in control of interest rates. His analysis works for Australia, so far. If he was talking about the UK or the Euro Area, for example, then it would have to be conceded that the market rate can diverge from the 'official rate'.
This happens because funds move between financial markets as banks operate across borders. Australia is a small and isolated market, but it becomes less isolated everyday and before long international banks will be operating alongside the high street banks you know well. But not before you do your exams.
Exactly how the Reserve Bank of Australia (RBA) controls interest rates is something you have to understand in Unit 4. Australia does this in a similar way to other countries, but has its own precise way of doing it.
Ross Gittins can write some really useful stuff and following his column is a good idea. (However sometimes he seems to get it off the back of a cereal packet so be careful!)
I have one argument with Gittins assertion that the RBA is in control of interest rates. His analysis works for Australia, so far. If he was talking about the UK or the Euro Area, for example, then it would have to be conceded that the market rate can diverge from the 'official rate'.
This happens because funds move between financial markets as banks operate across borders. Australia is a small and isolated market, but it becomes less isolated everyday and before long international banks will be operating alongside the high street banks you know well. But not before you do your exams.
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