Australia – growth in public employment has masked slowdown in private sector jobs market

A piece in the Australian Financial Review (gated) reports on findings from investment bank Jarden.

In brief:

• About 130,000 of the 437,000 people who gained work in the 12 months to February were employed in the NDIS-related sub-industries like allied health and non-childcare social assistance
• “All else being equal, without jobs growth in NDIS-related areas, the unemployment rate would be 4.6 per cent… whilst this is unrealistic, given some workers would have moved into other jobs, it illustrates how much support the program is providing to the labour market and economy,”
• public sector employment grew by 6 per cent over the 12 months to February, growth in demand-sensitive parts of the private sector such as construction, retail and manufacturing was just 1.4 per cent

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While government money keeps on flowing the labour market will enjoy the support, but if it slows the jobs market will slow. While the RBA has eyes on bringing down the inflation rate it does not want to lose gains in the labour market. That looks like it might get more and more difficult to achieve. Stagflation for Australia coming up or will the RBA cut sooner than is currently expected (some time around September seems to be the market consensus right now)?

This article was written by Eamonn Sheridan at www.forexlive.com.