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Australia’s Unemployment Falls to 5.6% Despite Job Losses

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Australia's unemployment
  • Australia’s Unemployment Falls to 5.6% Despite Job Losses

Australia’s unemployment rate has fallen to 5.6 per cent, despite the loss of 9,800 jobs, as the proportion of people looking for work tumbled.

However, the exact opposite occurred, with the loss of 9,800 jobs but unemployment falling to 5.6 per cent from an upwardly revised August number of 5.7 per cent.

The fall in unemployment was driven entirely by a drop in the participation rate – the proportion of people in work or actively looking for it – from 64.7 to 64.5 per cent.

Perhaps more concerning than the surprise slump in the proportion of people in the workforce was the composition of the estimated 9,800 jobs lost.

The Bureau of Statistics estimates that 53,000 full-time positions disappeared in September, only partly replaced by 43,200 new part-time jobs.

This continues a longer-term trend that appears to have accelerated over the past year, observed the program manager of the bureau’s Labour and Income Branch, Jacqui Jones.

Shift to Part-Time Work ‘Not a Good Outcome’ For Economy

The shift to part-time job creation and full-time work weakness over recent times was noted by JP Morgan analyst Tom Kennedy in a research note earlier this week.

He said the latest numbers fit with this trend and, while unlikely to force an interest rate cut by the Reserve Bank in the short term, would be raising concern at the central bank.

“You’re not going to see too much volatility in the jobless rate, but you should look at things like underemployment and wage growth,” he told Reuters.

“They are likely to remain elevated in the case of the former and very low in the case of wages. That’s not a good outcome.”

Yesterday, ratings agency Moody’s warned that underemployment was a major cause of rising mortgage repayment arrears, which are at a three-year high nationally and record levels in Western Australia, Tasmania and the Northern Territory.

‘The Numbers Are Rubbish’

However, other analysts doubt the veracity of the numbers, given the problems the ABS has had with its employment data over the past couple of years.

“The numbers are rubbish. No one is going to believe these numbers,” TD Securities head of Asia-Pacific research Annette Beacher told Reuters.

“The massive shifts in full-time/part-time is very easy to discount. It’s the sort of irregularities seen in recent months.”

The bureau’s employment figures are based on a survey of 26,000 households each month, a number which has been reduced due to budget pressures.

The sample is gradually rotated to ensure new households are interviewed and that the survey closely reflects the population’s make-up.

Some economists were warning of volatility in the September data because it was a rotation month, however most of those expected it to skew the number upwards.

“The ABS stated that it has altered the headline figure because the incoming rotation sample for Queensland was ‘considerably different to the rest of the Queensland sample’,” observed Paul Dales from Capital Economics.

“Somewhat unhelpfully, when we phoned the ABS it wouldn’t tell us in which direction it has tweaked the data.

“But, since the state breakdown shows that employment in Queensland fell by 4,100, we’re guessing that the actions of the ABS meant that the fall in employment was smaller than would otherwise have been the case.”

Jacqui Jones from the ABS said the move ensured the quality of the overall data.

“This reduced the influence of 580 households of the 4,600 Queensland sample; or around 2 per cent of the total Labour Force sample of 26,000 households,” she responded in a statement.

“The ABS will review this one Queensland rotation group when October data are collected and analysed next month.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

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Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

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oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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