The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Thursday, March 8, 2012

UBS: Unemployment ticks up...but 'holding around 5 1/4%'

UBS has a good summary below:

The unemployment rate ticked up in February to 5.2% (mkt: 5.2%, UBS: 5.1%), after unexpectedly falling in January to 5.1% – though it's broadly still holding around 5 1/4% since Aug-11. The participation rate ticked down to 65.2% (from 65.3%), the equal lowest since mid-07. (Interestingly, the broader quarterly labour underutilisation rate ticked down to 12.5% in the February-12 quarter, after a notable increase over recent quarters.)

* Employment was weaker than expected, retracing by 15k m/m in February (UBS & mkt: 5k), albeit after a 46k rebound in January was the strongest m/m rise in over a year. Nonetheless, the trend of jobs growth remains weak, with the y/y pace ticking down to 0.2% (after 0.3%), only modestly above flat in 2011 which was around weakest in almost two decades.

* The m/m fall of jobs was entirely driven by part-time unwinding half of last month's gain (-15k, after +31k, albeit picking up to 0.7% y/y), while full-time was flat (0k, after +15k, albeit slowing to flat y/y). By State, over the last 3 months, jobs in WA rose by 22k, but the rest of Australia fell by 28k.

* On the stronger side, hours-worked rebounded m/m, albeit this only offset last month's fall (1.4%, after -1.5%), edging up the y/y pace to 0.4%, after 0.2% in Jan was the weakest in 2 years.

Overall, today's February labour market data was on the softer side, with jobs weaker than expected (albeit only partly unwinding January's bounce), and the unemployment rate ticking back up to 5.2%. Together with yesterday's weaker than expected Q4 GDP growth (0.4% q/q, half expected), this opens the door for a RBA rate cut, if the rise in the unemployment rate continues. While we (and the RBA) continue to expect a modest increase of the UR towards 5 1/2% ahead, it has been broadly steady for a number of months around 5 1/4%. Further, with forward leading indicators suggesting a better trend of jobs growth ahead, we continue to expect the RBA to hold rates.