Garry Shilson-Josling, AAP Economist
(Australian Associated Press)
The government’s “jobs and growth” mantra will be tested by a barrage of economic data over the coming week.
We already know from figures last week how many jobs have been added over the past year – an extra 245,000 over the year to April.
That’s pretty good but the trend has slowed alarmingly in recent months and a 2.6 per cent drop in average hours worked – over three hours and 35 minutes per month less per worker – rather takes the gloss off it.
It means the total number of hours worked in April was actually lower than a year earlier.
In other words, less work is being spread around more people.
Whether or not that situation improves depends a lot on economic growth, measured by gross domestic product (GDP) – the quantity of goods and services being produced.
The faster this measure of production increases, the faster the number of jobs grows.
It’s not always in lockstep, of course.
Some industries, such as accommodation, restaurants and cafes, need lots of workers to produce a given amount of goods or services.
Others, like mining, are highly mechanised and require very few.
Sometimes the employment payoff is vanishingly small, or even non-existent – like the Northern Territory’s construction sector, where activity related to resource projects boosted output by 62 per cent, about $1.8 billion, in 2014/15 without increasing the number of hours worked at all.
Despite such exceptions the general rule is still that where GDP goes, employment follows, usually with a delay of around six months give or take a quarter or two.
So the national accounts on June 1, Wednesday next week, really do matter, even though they will be a bit dated.
The March quarter will have ended two months before the figures are finally published, but better late than never.
There will be some curtain-raisers ahead of the national accounts.
Construction and business investment figures on Wednesday and Thursday will fill in some important blanks for the quarter.
And next week we’ll have business inventories and profits figures, along with aggregate wages, on Monday then foreign trade and public sector spending on Tuesday.
By Wednesday, economists will have a reasonably good idea of the GDP figure, but it will still be a bit like Christmas: you think you know what you’re getting but there’s always the chance of a pleasant surprise or a bitter disappointment.
Either way, the numbers will be the background for the final month of the election campaign, and spell out the economic context of the early stages of the new government.