Unemployment drops 0.2% in November: Economy Roundup

The unemployment rate fell by 0.2 percentage points to 5.2% during November in line with forecasts, according to the latest figures from the Australian Bureau of Statistics.

The figures show that a total of 54,600 jobs were created during the month, with full-time jobs rising by 55,100. Part-time employment fell by 400, the figures show.

Unemployment fell by 19,500 overall, with the participation rate growing to 66.1% – a record high.

But while the result has exceeded expectations, CommSec’s Craig James says the result “raises more questions than answers”.

“If employment is surging, why are the numbers of hours worked barely moving? And if more Australians are working than ever before, why aren’t consumers spending?”

“While it’s good news that plenty of Aussies have jobs, now the focus will need to shift to Australia’s awful productivity growth. More people are getting jobs but plenty of us must also be working fewer hours and putting out less output. While hours worked are up 3.1% on a year ago, productivity is up only 0.5%. In short, we shouldn’t celebrate too loudly.”

James also points out that there are 57,000 fewer workers aged 15-19 than there were two years ago, and that employment in the largest demographic of 35-44 years has only grown by 1.3% – hence the lower consumer spending.

Meanwhile, Westfield has set itself a long-term target, with the company saying that operational segment earnings in 2010 would be 90c per security, with distribution at 64c.

Chairman Frank Lowy told shareholders in a general meeting that the company is now seeking to improve returns on equity.

“Our aim is to position the group to achieve medium- to long-term earnings growth in excess of 6% per annum,” Lowy said.

Ten Network Holdings has appointed Brian Long as its new non-executive chairman, who is set to replace Nick Falloon when he steps down on December 10.

“In my role as independent chairman, my priority will be to ensure that the interests of all shareholders are represented as we continue to develop the company in its next stage of growth and to address the challenges of the digital age,” Long said in a statement.

Elsewhere, Bank of Queensland shares have dropped over 8% this morning after the company downgraded full year cash guidance to between $210-230 million.

Managing director David Liddy said the change was made after a review of the company’s commercial lending portfolio.

“This is above the previous expectations of bad and doubtful debt expenses in the first half FY11 which was in line with second half FY10 results of $53 million,” Liddy said.

Shares flat after weak overseas leads

The Australian sharemarket has opened slightly flat this morning due to weak overseas leads, but has risen during morning trading due to the positive jobless data.

The benchmark S&P/ASX200 index was up 43 points or 0.92% to 4743 at 12.15 AEST, while the Australian dollar rose to US99c after the jobless data was released.

ANZ gained 0.7% to $23.31, as Commonwealth Bank shares also rose 0.9% to $50.03. NAB shares rose 0.6% to $23.76 as Westpac gained 2% to $22.20.

The Reject Shop has cut its full year profit guidance citing disappointing retail sales.

The company has cut its forecast for net profit for the 2011 financial year from between $26 million and $26.5 million to between $21-22 million.

“Since the last interest rate rise comparable store sales for November, and December to date, has been negative, resulting in overall sales being significantly below expectations,” managing director Chris Bryce said in a statement.

“However it is our understanding that overall customer traffic and spending is down across the retail sector,” he said.

Rate rise required despite increased savings

Reserve Bank of Australia assistant governor Philip Lowe has said that November’s rate rise was needed even though consumers are spending less and paying down debt.

“The Board has sought to reduce the probability of inflation rising to uncomfortably high levels and thus requiring a more substantial increase in interest rates later on,” Lowe said yesterday.

“If indeed potential output growth were to pick up, this would mean that the economy could grow more quickly over the medium-term without causing inflation to rise.”

However, Lowe also said the RBA expects the household savings ratio will stay high for “quite a while yet”.

“If this were to occur, not only would it lead to a lowering of risk in household balance sheets, but it would reduce inflationary pressures during the period of high investment.”

In the United States, stocks have risen but only slightly due to investors’ fears over continued problems regarding debt negotiations in Europe. The Dow Jones Industrial Average gained 13.32 points or 0.12% to 11,372.48.