The latest

Australia’s unemployment rate rises slightly to 5.3 per cent in February, with 10,700 new job seekers

The Dow Jones index rose 2.95 points to 10,567.33

The $A was fetching 91.57 points early today

This week

Federal parliament sitting

Today-   Unemployment figures, February, RBA March bulletin

Pension payments rise from Saturday

Many more stories, see the separate categories=================>

“….it is important to remember,” he says,”that one of the least productive things a society can do is leave large numbers of people at home who actually want to work.”

That cue from Mr Lowe, who is the bank’s Assistant Governor (Economics),  gives us a clearer look at the latest job market figures.

Yes.  Unemployment rose by 10,700 last month. And  the nation’s seasonally adjusted unemployment rate rose slightly to 5.3 per cent, from 5.2 per cent the previous month.

The Statistician’s labour force figures also show that 615,900 Australians were still out of work last month.

Mr Lowe was urging those who attended a seminar in Sydney, earlier this week, to remember that Australia must become more productive, if it is to keep a lid on inflation. That is, it must produce more.

So Mr Lowe would have been pleased, as he studied the bureau’s latest figures, to see that Australia’s male labour force under-utilisation rate is, once again, trending down.

That rate, for women, is also flattening, after rising sharply last year.

So what, really, is happening right now, in Australia’s job market?

Thousands of Australians were shifted to part time work, after the global economic crisis struck.

That helped them keep some income, at least.

However there are now some signs that move to part time work is being reversed, as Australia’s economy recovers.

In fact, the bureau reports 11,400 Australians actually found full time work in February.

That was offset, though, by a fall of 11,000 in part time employment.

A small, overall, improvement, perhaps.

This movement, though, is still positive.

So was that Mr Lowe smiling?

Surely not.  He’s an economist.

The Bureau of Statistics reports that home finance commitments fell steeply in January, both in terms of the number of home building starts financed and the amount lent to help people buy homes.

These figures, of course, are still affected by Federal government moves to wind back its stimulus spending.

So it may take some months yet for clear trends to appear.

Even so, the bureau reports that a bare $21.2 billion was lent in January to finance home purchases, a 3.3 per cent fall from the December level.

Indeed, the bureau’s figures now show that lending to build new homes has now fallen for three successive months.

The Housing Industry Association says recent rate rises are curbing activity in Australia’s housing market.

The Reserve Bank has  raised rates in four of the past five months.

The Association senior economist, Ben Phillip, said the situation now calls for care.

“The Reserve Bank must take stock of the impact that higher interest rates are having on the new home market,” Mr Phillips said.

The bank, itself, is aware of the problem, noting that spending on housing will have to be increased, over the medium term, if the demands of Australia’s strongly rising population are to be met, without fresh pressure on both house prices and rents.

The bank’s Assistant Governor, Phlip Lowe, acknowledged these risks, in a speech he gave to a seminar in Sydney.

(see next story)

House bursting at the seams?

Don’t worry.  You are not alone.

The Reserve Bank knows of your problems.

Indeed, it fears that these trends could push house prices – and rents – even higher

Its Assistant Governor, Philip Lowe, spoke at some length about these issues, at a seminar in Sydney today.

He noted that the number of houses being built in Australia over recent years had been below average, even though the nation’s population has been growing strongly.

That had meant house prices had been rising and rental vacancy rates had been very low.

Mr Lowe spoke of other, less obvious, trends, too.

He said that, on average,  more Australians are now living in each house and more money is being spent on renovations, rather than new buildings, now.

“Obviously examples of this are the trend towards young adults staying in the parental home longer and a rise in the number of people sharing accommodation,” Mr Lowe said.

“In a sense, as a society, there has been a trade off between quality and quantity.

“In particular, we have chosen to build bigger and better appointed dwellings, rather than more dwellings,” Mr Lowe said.

Mr Lowe said if strong population growth continues over an extended time, Australia might have to devote a bigger share of its gross domestic product to housing in future.

“If this does not happen further adjustment in housing prices and rents is likely to occur,” Mr Lowe warned.

The economists at  Access Economics, who have just published new retail forecasts, are confident about that.

Naturally they admit that our spending has been boosted over the past year by stimulus measures, such as tax breaks,  subsidies and low interest rates, which left extra money in many budgets.

However they say those times are now rapidly  passing , to be replaced by new growth, based on a stronger job market.

“Ultimately,” they say,”spending growth is regulated by income growth.”

Th Access economists say, too, that job growth is the “bedrock” of consumer spending.

Access noted that almost 200,000 jobs had been created in the five months to January.

It said, too, that about half of those new jobs had been full time.

“A greater sense of security makes for a more confident consumer,” Access said.

Its work is backed by other economic research.

The National Australia Bank, for example, is reporting that business confidence has returned to the surprisingly strong levels of last November.

That means business confidence is now back at levels not previously seen since May 2002.

And the ANZ bank said the number of job ads, appearing in Australia, had leapt by 19.2 per cent in February.

The ANZ said the nation is now “enjoying solid employment growth and reduced unemployment.”

However it warned that “a record 30.2 per cent” of all Australian jobs are now part time or casual.

The bank’s chief economist, Warren Hogan, said this represents “a significant degree of spare capacity or underemployment.”

Access has reservations, too.

It says, for example, that there are still “plenty of factors which will stop retail sales from being spectacular.”

These would include further interest rate rises, which would slow growth in house prices and ultimately affect consumer confidence.

These rate rises would eat directly into shoppers’ incomes, Access said.

And the Federal Opposition Leader, Tony
Abbott, has put in a high bid for them, with a six month paid parental leave scheme, which he has just announced.

It would see parents paid the equivalent of their current salary, up to an annual rate of $150,000, for a period of six months.

The new scheme, which would be funded by a 1.7 per cent levy on big business, leaves Labor’s rival scheme in the shade.

Labor is merely offering  women 18 weeks’ pay at minimum wage levels.

This means parents could get up to $75,000, under the Coalition’s scheme, against just $9,800 under the government’s plan, which still has to go to the Senate.

Mr Abbott estimates his tax on Australia’s 3,200 firms earning more than $5 million a year would net $2.7 billion.

He said he did not expect big business would be pleased with his plan.

“I don’t expect anyone to cheer about having to pay more but I expect that even people who operate in big business think of themselves as citizens as well as business people,” Mr Abbott told reporters.

He was right about that.

Several business leaders including Peter Anderson, chief executiveChamber of Commerce and Industry attacked his idea.

“Imposing additional costs like these on the business community is not fair because the benefits to business are uneven and are far less significant than the benefits to the mums and dads who are going to be taking the maternity-paternity leave,” Mr Anderson said.

Two government ministers, Jenny Macklin and Tanya Plibersek, ridiculed Mr Abbott’s announcement, dismissing it as “a thought bubble.”

“His sham policy has no detail, no costings and no timeline,” the two ministers said.

“Australian families need certainty on paid parental leave to plan for the future,” they added.

“This is yet another backflip on parental leave from Mr Abbott,” the two ministers said.

“As a minister in the Howard government he campaigned for years against paid parental leave, saying it would be introduced ‘over his dead body.’”

Mr Abbott’s announcement was timed to coincide with International Women’s Day.

Despite real progress, over recent decades, the long held goal of equal pay, for Australian women, remains as elusive as ever.

The latest figures, from the Australian Bureau of Statistics, show the average weekly earnings of the nation’s women are still barely two thirds those of its male workers.

If so, you might be wise to look at an industry superannuation fund, instead of one of the commercial funds.

A new report, admittedly funded by the industry superannuation network, raises some interesting points.

The industry funds, of course, were started by Australia’s unions.

So you would have to be eligible, to join a particular fund.

However many workers who are eligible to join one of these funds have not done so.

In fact, the report says, more than 4 million Australians workers, who would be eligible, have joined a commercial fund instead.

And, it adds, each of them is paying hundreds of dollars a year in commissions, mostly for financial advice that they do not receive.

These payments are known in the trade as trailing commissions.

Industry funds do not charge commissions of this kind.

Does this matter all that much?

Yes it does, the report says.

“Fees and commissions paid by retail fund members could cost someone on average wages more than a year’s  salary over their working life,” it concludes.

Then it adds”The more you pay for super. the less you get.

“On average, for each additional 1 per cent paid in fees, members of the largest public offer funds lost almost 1.5 per cent in net returns.

“Since 1996, more than $40 billion has been lost from Australian workers’ super accounts, due to their accounts being silently milked by commissions,” the report says.

The entire superannuation industry is being overhauled at present, with the Federal government working on a raft of new reforms.

This follows the payout shocks that many older Australians suffered after the stock market crash.

The report, though, strongly suggests that those who can shift to an industry fund would be wise to consider doing so, before the new reforms take effect.

How, though, do the industry funds perform, financially?

The report claims that they have done better than the retail funds in nine of the past 10 years.

Mr Rudd renewed this pledge – first made before the 2007 election – in the wake of speculation that the government will have to increase taxes, to meet rising health costs.

However the Prime Minister’s promise may not provide all that much comfort to taxpayers.

Mr Rudd said the costs of his planned hospital funding reforms would be met from the Federal budget.

He added, though, that, any politician who would not acknowledge that Australia’s health costs would increase, over the long term, “is not worth a pinch of salt.”

Despite that tax, measured as a proportion of the overall economy, would not rise.

“That’s what we said before the election.

“That’s what we’ve stuck to since the election.

“That’s what we’ll adhere to in the future,” Mr Rudd said.

He was speaking in a Sydney radio interview.

“We have said consistently that we will not increase tax as a proportion of Gross National Product,” Mr Rudd added.

And the good economic news keeps rolling.

The Roy Morgan organisation reports that consumer confidence rose strongly in the final week of February.

It is now 34 points higher than it was in March last year, when Australians were very worried about the global economic crisis.

The Australian Bureau of Statistics is also reporting a sharp improvement in Australia’s trade.

Australia’s exports rose by 1 per cent in January, while imports for the month fell by 3 per cent.

That meant Australia’s trade deficit fell by almost $1 billion during the month.

Low export prices and strong imports slashed 1.2 per cent from Australia’s economic growth, in the final three months of last year.

However the nation still managed to chalk up 0.9 per cent growth in that time.

And, if sustained, January’s improvement should contribute to further economic growth in the early months of this year.

The Roy Morgan survey showed that 48 per cent of Australians now expect their families to be better off at this time next year.

That was the highest level, seen on this indicator, since October last year.

Only 14 per cent expected their families to be worse off.

The organisation’s chief, Gary Morgan, saw this week’s rate rise, too, as a positive sign.

He described it as :”…a firm sign that the RBA (Reserve Bank) believes the Australian economy is on a sustainable growth path…”

There are, certainly, signs of that in the latest national accounts.

Private investment, for example, rose by 3.5 per cent in the final three months of last year.

And Australia’s household spending rose by 0.7 per cent, in the same time.

But much of the force, that produced the nation’s 0.9 per cent economic growth in the quarter still came from the Federal government’s stimulus package.

That is reflected in the 10.2 per cent rise government investment, that appeared in the Statistician’s national accounts for the December quarter.

However, a sudden jump in the nation’s terms of trade, during the final three months of last year, must not be overlooked. either.

Australia suffered an 11.2 per cent fall in its terms of trade last year, in the wake of the global economic crisis.

However, that indicator showed a 2.9 per cent improvement in the December quarter.

China’s still strong demand for Australia’s iron ore and coal helped there.

So did growing demand from India.

The Federal Treasurer, Wayne Swan, was also upbeat in his assessment of the bureau’s figures, noting that company profits, too, rose in the final three months of last year.

“After falling for four consecutive quarters, the gross operating surplus of private, non financial corporations rose by 4.8 per cent in the December quarter,” Mr Swan said.

“The private sector is looking increasingly well placed  to pick up the slack as the Government’s fiscal stimulus is progressively withdrawn over coming quarters,” the Treasurer added.

So – barring unforeseen events – the future is now starting to look at least a little brighter.

That, however, is a very substantial qualification.

The Greek Prime Minister, George Papandreou, says his country’s situation with debt is now so bad, that it is like being in a war.

That declaration, of course, is aimed primarily at his country’s own population.

Greeks have not been at all eager to embrace the restraints that are necessary, to put their country onto  a more sustainable path.

Global markets, though, are still very nervous – and the results of a major default are unpredictable.

And such events could well have major repercussions for Australia.