In the middle of the biggest decline in Australia’s terms of trade in decades, the unemployment rate has actually dropped from 6.2% a year ago to 5.8% in January 2016. What’s more, the participation rate has been holding steady at around 65.2%, slightly above the 65.1% average of the last ten years and well above the 40 year average of 63.1%. To many, the resilience of Australia’s employment statistics has been a considerable surprise given declining commodity prices and a retracement in business capital expenditure on major new projects, both of which have had a considerable impact on Australia’s gross domestic product (GDP). So what conclusions (if any) can be drawn from this data? We take a closer look in our March Newsletter found here: (VIEW LINK)
The resilience of the Australian employment statistics is not so surprising if you take a number of demographic trends into account. For example, Australia currently has the largest population of children on record, as well as record numbers of people retiring. I believe that both of these trends are putting significant downward pressure on the unemployment rate. Indeed, these trends are likely to continue so it is possible that the unemployment rate may end up falling to around 5% within the next two years.