Market plummets on sub-prime fears: Economy round-up

The S&P/ASX 200 has tumbled 2.6% on yesterday’s close to 6518.3 by 1pm today, following sub-prime driven selling on the US Dow Jones Index overnight and weaker oil and commodities prices today.

Shares in Australia’s banks have slumped this morning after giant US investment bank Morgan Stanley admitted its sub-prime mortgages had lost $US3.7 billion in value due to the faltering US home market.

The volatility has also driven the Australian dollar down to US92.58c at 1pm after closing at US93.73c yesterday.

On the jobs front, more than 70,000 new full-time jobs were created in October, further drying up the labour pool available to employers.

Australian Bureau of Statistics data released today shows a slight increase in the unemployment rate to 4.3%, but this is mainly due to a substantial drop in part-time employment and a 0.06% rise in job seeker numbers.

The trend in increasing full-time employment is partly due to the booming resource-driven economies of Queensland and Western Australia. According to a new report by CCIWA, the mining boom in Western Australia will create an additional 300,000 to 400,000 new jobs in the next 10 years – a huge leap that the current Australian job market could not possibly meet.

CCIWA argues that a massive increase in the flow of overseas workers will be required in order to meet the state’s insatiable demand, and if there figures are correct, it’s a conclusion that’s hard to doubt.