gillard says aust economy strong , page-14

The only words I heard from her mouth were 'the Australian economy is under threat of severe recession'.

Given we have one customer in China for more than 50% of our product, if the slow to a GDP growth rate of only 5% it's all over for Aust.

Australian non-mining companies have started to retrench workers on a massive scale. As the fear of retrenchment spreads it will further contract consumer confidence. This morning the print media finally caught up with the retail slump, describing it as the worst in 50 years. July car sales have dived.

Suddenly, interest rate rises are completely off the agenda. The next move in interest rates will be down and, in hindsight, it looks as though at its last two meetings the Reserve Bank should have been debating interest rate cuts rather than rises to head off the non-mining slump.

The Australian statistician will confirm the mass retrenchments in a month or two but Roy Morgan research has signalled the dramatic change in the employment scene. The statistician and Roy Morgan have different ways of measuring employment and unemployment but until now both have been reporting strong employment data.

But Roy Morgan?s July survey shows that employment in July fell by 418,000 to 10,802,000, with the falls consistent across both the full-time employed, at 7,421,000 (down 219,000), and part-time employed, at 3,381,000 (down 199,000).

This is the biggest monthly fall in Australian employment ever recorded by the Roy Morgan employment measure.

In fairness, the July fall in employment followed four straight months of rises and takes Australian employment back to the levels of February as school leavers began to join the workforce after summer holidays at the beginning of the new financial year.

Employment was the last of the dominos to fall.

Five months ago I started to realise that Treasury, the Reserve Bank and the vast bulk of the Australian share analysts were calling the Australian non-mining economy incorrectly (The threat of credit shock, March 7). My information came from Dunn and Bradstreet and talking to business people.

As the months rolled by it became more and more obvious that those that lived in Canberra, near Martin Place and near Collins Street were totally out of touch with what was happening in non-mining Australia.

In all I wrote more than 20 commentaries (Cutting away from the RBA, July 18). One by one industries such as retail, housing, cars, tourism, manufacturing and many others have confirmed the downturn, but always employment and unemployment (whether measured by ABS or Roy Morgan) moved against the trend I was seeing.

I could explain the fact that employment had held by pointing to lesser hours worked and the mining boom, but given the size of the downturn I was seeing these explanations were not as convincing as I would like.

What actually happened was that business people believed the boom propaganda put out by Canberra, Martin Place and Collins Street and kept their staff on. But once the budget launched an unprecedented attack on the middle class (BUDGET 2011: Nine hits make a lethal combination, May 10) and the truth spread around the business community network by their own experiences, reinforced by Business Spectator and other avenues, they began to act. Had the business community not retrenched staff we would have seen a huge fall in profitability.

Roy Morgan also reports a rise in unemployment ? up from 7 per cent to 7.6 per cent. Today?s Liddington-Cox graph shows the comparison of Roy Morgan and ABS unemployment statistics.


We can debate the differences between Roy Morgan and ABS methodology at another time. The key is the trend and Morgan has alerted us to what will follow in the official ABS statistics.

Finally I want to praise all those who, with me, alerted the community to the depth of this downturn, including Westpac?s Bill Evans. Together we played a role in preventing the Reserve Bank from making a horrible mistake.

http://www.businessspectator.com.au/bs.nsf/Article/jobs-mining-employment-resources-RBA-retail-pd20110804-KDSEM?OpenDocument&src=sph