Trend analysis can be very useful for many things and not just share prices.
Long term labour market analysis may not tell us what the actual unemployment rate will be on a month to month basis, but it will inform us which direction we are heading.
As stated previously, Australia is on a long term market adjustment and trending up from the lows of 4% unemployment late 2008. We did have jump to 5.8% unemployment in August 2009 following the GFC and then a retraction to 4.9% when most economists breathed a sigh of relief, however as I stated then and again now that was just a correction and the trend will be upwards slowly for the next few years potentially peaking at 7%.
Each new monthly report is confirming this, slowly ticking up to 4.9%, then 5.1% and today 5.3% - I forecast that September will see 5.4%, and we may well hit 5.8% by December 2011 - I hope I am wrong, but time will tell if the trend is correct
Whatever the month to month shows, the trend is not good news and this will further drive down consumer confidence and impact on how they spend their hard earned money.
There is no question this will impact on marketers ability to drive customer acquisition, and many may well cut back on advertising expenditure - for those that do I may suggest being innovative and letting your agency foot the bill and the risk. Why not work with an agency that puts skin in the game and absorbs all the cost and you only pay for the results you need - no results and you pay nothing - it is the ultimate marketers dream that is already been used by some of Australia's largest blue chip advertisers. Check this agency out to see what I mean www.adad.com.au - Oh yes I do work here as well
.
Wednesday, September 7, 2011
Monday, August 22, 2011
Why manufacturing industries shed jobs in global economy
There is a lot of new talk today about an old problem, the loss of jobs in the manufacturing sector. This is nothing new and has been going on for many decades, this is termed structural unemployment. This occurs when jobs are lost due to changes in the structure or make-up of the economy itself, and when those who lose their jobs do not have the skills needed for other work that is available.
Structural unemployment can occur even in times when plenty of jobs are available, which is why we have also seen a decline in worker numbers in the power industry since 1989 as jobs growth expanded almost everywhere else. The real social issue is that as these people lose their jobs from an industry that is shrinking, they do not have the skills to do the work in another industry that is growing, and they give up looking and are no longer even counted as unemployed.
Some structural unemployment also comes from changes driven by population dynamics. Australia’s population is aging, and our school system that was built to accommodate the post war “baby boom” is increasingly seeing fewer new students entering the school system. This will ultimately convert to fewer jobs for primary and high school teachers creating a potential structural loss of jobs.
At the same time the aging population will create an increase for workers in nursing homes, retirement villages, financial planning and other social support workers such as home nursing. This example of structural unemployment that will be faced in the future will mean that some teachers that lose their jobs, will probably not have the immediate skills to meet the increasing demand for health care workers, financial planners etc, but because they are well educated will have the ability to re-skill and take advantage of the “new” jobs and new industries that become available.
Many of the reforms of the past decades that have been designed to make the Australian economy more globally competitive, as manufacturing moves to countries with a competitive advantage on pure cost. These cuts in protection to the manufacturing industry, which have driven down the price of consumer products has displaced thousands of well paid workers from their jobs. Their lifelong skills working in manufacturing could not be transferred to another industry or job.
This is a clear and ongoing case of structural unemployment, because since 1984 this industry peaked at 1,291,100 workers and has gradually declined to 976,300 workers as of May 2011; a permanent loss of 314,800 jobs. As manufacturing shifts to countries with a competitive price advantage, high wage manufacturing countries such as Australia, the U.S etc will continue to shed jobs – unless they can redefine their competitive advantage in the global economy.
Structural unemployment can occur even in times when plenty of jobs are available, which is why we have also seen a decline in worker numbers in the power industry since 1989 as jobs growth expanded almost everywhere else. The real social issue is that as these people lose their jobs from an industry that is shrinking, they do not have the skills to do the work in another industry that is growing, and they give up looking and are no longer even counted as unemployed.
Some structural unemployment also comes from changes driven by population dynamics. Australia’s population is aging, and our school system that was built to accommodate the post war “baby boom” is increasingly seeing fewer new students entering the school system. This will ultimately convert to fewer jobs for primary and high school teachers creating a potential structural loss of jobs.
At the same time the aging population will create an increase for workers in nursing homes, retirement villages, financial planning and other social support workers such as home nursing. This example of structural unemployment that will be faced in the future will mean that some teachers that lose their jobs, will probably not have the immediate skills to meet the increasing demand for health care workers, financial planners etc, but because they are well educated will have the ability to re-skill and take advantage of the “new” jobs and new industries that become available.
Many of the reforms of the past decades that have been designed to make the Australian economy more globally competitive, as manufacturing moves to countries with a competitive advantage on pure cost. These cuts in protection to the manufacturing industry, which have driven down the price of consumer products has displaced thousands of well paid workers from their jobs. Their lifelong skills working in manufacturing could not be transferred to another industry or job.
This is a clear and ongoing case of structural unemployment, because since 1984 this industry peaked at 1,291,100 workers and has gradually declined to 976,300 workers as of May 2011; a permanent loss of 314,800 jobs. As manufacturing shifts to countries with a competitive price advantage, high wage manufacturing countries such as Australia, the U.S etc will continue to shed jobs – unless they can redefine their competitive advantage in the global economy.
Saturday, July 30, 2011
The law of social cycles
How society evolves is a question that has baffled many analysts or economists since ancient times - Plato, Aristotle, St. Augustine, Marx, and Toynbee, among many others have tried to solve this puzzle. Their works, once the cause of much intellectual ferment, now holds little appeal for most social scientists.
This method of analysis, namely the method of historical determination where we try to detect a pattern in the maze of historical events, is an idea that has long been regarded dead by today's economists.
My recent work in looking for a pattern in decades long term unemployment cycles, and the accuracy of using those insights to foresee the current economic woes of the United States, has led me to now do further social trend analysis to see what other subtle patterns can be found and what they may mean for the global economy in our life time.
If you would like to read these insights as they are developed than simply subscribe (free) to my blog
Steve
This method of analysis, namely the method of historical determination where we try to detect a pattern in the maze of historical events, is an idea that has long been regarded dead by today's economists.
My recent work in looking for a pattern in decades long term unemployment cycles, and the accuracy of using those insights to foresee the current economic woes of the United States, has led me to now do further social trend analysis to see what other subtle patterns can be found and what they may mean for the global economy in our life time.
If you would like to read these insights as they are developed than simply subscribe (free) to my blog
Steve
Thursday, July 28, 2011
Unemployment on a nine year upswing
It seems my forecast made in January 2009 for the unemployment rates in the US and Australia have been spot on.
I am currently updating my forecast for Australia based on the same long term trend analysis which clearly shows that we have been in a new upswing since early 2009 and that this nine year leg will not run it's course until around December 2018 with unemployment peaking at close to 7%. We did reach the stage one peak of 5.8% as forecast and despite the recent pullback to 4.8%, the long term trend is up.
If you would like to get the full report contact me at my email address, steve.hinch@me.com
I am currently updating my forecast for Australia based on the same long term trend analysis which clearly shows that we have been in a new upswing since early 2009 and that this nine year leg will not run it's course until around December 2018 with unemployment peaking at close to 7%. We did reach the stage one peak of 5.8% as forecast and despite the recent pullback to 4.8%, the long term trend is up.
If you would like to get the full report contact me at my email address, steve.hinch@me.com
Wednesday, July 27, 2011
Retail deflation, will the malaise spread?
Deflation is caused by a general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in personal, government or investment spending.
The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression. Central banks attempt to stop severe deflation, along with severe inflation, in an attempt to keep the excessive drop in prices to a minimum.
Australian consumers have stopped spending in the retail environment for quite some time now and we are already seeing the continuing decline in prices in the big retailers to attempt to get spending going again – but it’s not working – so we do at least have retail deflation and jobs will come next.
Is general deflation on the horizon? – we are seeing a contraction in personal spending and the subsequent decrease in retail prices, now we just need to see a cut to interest rates and we have all three needed components;
1. Lack of spending from consumers reducing demand which in turn slows supply
2. Decreasing prices making purchasing value of the $ stronger if people would just spend
3. Lower interest rates making the cost of money cheaper to buy goods – but nobody want to.
Deflation is often a precursor to an economic depression, let’s hope this is not the case, but look around the world
The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression. Central banks attempt to stop severe deflation, along with severe inflation, in an attempt to keep the excessive drop in prices to a minimum.
Australian consumers have stopped spending in the retail environment for quite some time now and we are already seeing the continuing decline in prices in the big retailers to attempt to get spending going again – but it’s not working – so we do at least have retail deflation and jobs will come next.
Is general deflation on the horizon? – we are seeing a contraction in personal spending and the subsequent decrease in retail prices, now we just need to see a cut to interest rates and we have all three needed components;
1. Lack of spending from consumers reducing demand which in turn slows supply
2. Decreasing prices making purchasing value of the $ stronger if people would just spend
3. Lower interest rates making the cost of money cheaper to buy goods – but nobody want to.
Deflation is often a precursor to an economic depression, let’s hope this is not the case, but look around the world
Monday, July 11, 2011
Jobs are a commodity; whoever has the most candidates wins the game
Job boards have been around in Australia for a while now, and it seems that all of them have gone through various stages of repositioning and rebranding. Research conducted through Roy Morgan shows that using job boards to search for new opportunities has increased considerably since the 2008 GFC, but job boards have not kept up with consumers.
At the end of 2005, 1,830,000 people or 19% of employed people were using the job boards on a regular basis, while there were 9,925,000 working. As the labour market tightened in 2007 with more jobs than candidates, job board use declined to just 16% of the workforce or 1,647,000 people, while the numbers working had grown to 10,139,000 – where they happy in their current jobs?
This level of job board action among employed people remained quite static through to March 2008, growing to just 1,999,000 or back to similar levels as December 2005, while the number of people working had grown to 10,327,000.
Then the impact of the GFC started to take hold and by March 2009 this number had grown to 2,382,000 or 23% of the workforce, which had grown to 10,495,000.
From this point forward job board activity has continued to grow each quarter even as the number of people working has continued to grow. The latest Roy Morgan data for March 2011 shows that 3,027,000 people or 27% of the workforce were using job boards while the number of people now working had grown to 11,112,000.
Since December 2005 job board use has grown by 1,193,000 people or 65% while 80% of this growth has come since the GFC, and the number of people working as grown by 1,289,000 or just 13%.
The question for job boards and recruitment firms alike, is what comes first the job on offer or the candidate to fill it – the answer is you can have all the jobs to offer, but without candidates you have nothing.
The world has changed from the days when there were 15 or more qualified candidates for every job on offer to now when there may only be 2 or 3 – sometimes none.
For job boards and recruitment firms alike, they need to understand that it is the one (job board or recruitment firm) with the most candidates that will win the game.
For recruitment firms it is about finding ways to build and hold your pool of candidates through an efficient CRM process – treating candidates like valuable customers with multiple touch points during their job search lifecycle. – Think like a bank.
For job boards it is about reinventing your brand and developing social communities that give job seekers a reason for intersecting with your site beyond just looking for a job, just look at how LinkedIn has grown as a community and has also become a massive job board / recruitment resource.
There is a new age of job search coming, and for a variety of reasons people will be looking for new jobs or a lifestyle change, if your job board has a large community of skilled people interacting regularly through your site, then you win and the jobs listings (revenue) will flow through – build it and they will come, but do it now and gain the first to market advantage.
At the end of 2005, 1,830,000 people or 19% of employed people were using the job boards on a regular basis, while there were 9,925,000 working. As the labour market tightened in 2007 with more jobs than candidates, job board use declined to just 16% of the workforce or 1,647,000 people, while the numbers working had grown to 10,139,000 – where they happy in their current jobs?
This level of job board action among employed people remained quite static through to March 2008, growing to just 1,999,000 or back to similar levels as December 2005, while the number of people working had grown to 10,327,000.
Then the impact of the GFC started to take hold and by March 2009 this number had grown to 2,382,000 or 23% of the workforce, which had grown to 10,495,000.
From this point forward job board activity has continued to grow each quarter even as the number of people working has continued to grow. The latest Roy Morgan data for March 2011 shows that 3,027,000 people or 27% of the workforce were using job boards while the number of people now working had grown to 11,112,000.
Since December 2005 job board use has grown by 1,193,000 people or 65% while 80% of this growth has come since the GFC, and the number of people working as grown by 1,289,000 or just 13%.
The question for job boards and recruitment firms alike, is what comes first the job on offer or the candidate to fill it – the answer is you can have all the jobs to offer, but without candidates you have nothing.
The world has changed from the days when there were 15 or more qualified candidates for every job on offer to now when there may only be 2 or 3 – sometimes none.
For job boards and recruitment firms alike, they need to understand that it is the one (job board or recruitment firm) with the most candidates that will win the game.
For recruitment firms it is about finding ways to build and hold your pool of candidates through an efficient CRM process – treating candidates like valuable customers with multiple touch points during their job search lifecycle. – Think like a bank.
For job boards it is about reinventing your brand and developing social communities that give job seekers a reason for intersecting with your site beyond just looking for a job, just look at how LinkedIn has grown as a community and has also become a massive job board / recruitment resource.
There is a new age of job search coming, and for a variety of reasons people will be looking for new jobs or a lifestyle change, if your job board has a large community of skilled people interacting regularly through your site, then you win and the jobs listings (revenue) will flow through – build it and they will come, but do it now and gain the first to market advantage.
Sunday, July 10, 2011
The overall jobs growth story in Australia belies the underlying change that has been taking place since the GFC.
The overall jobs growth story in Australia belies the underlying change that has been taking place since the GFC.
The data provided by the ABS clearly shows how the labour market has changed since the beginning of the GFC. According to the ABS in December 2007 there were 10,726,000 people employed, with 7,690,300 (71.6%) in full time employment, and 3,036,000 (28.3%) in part time employment.
According to the latest ABS data there are now 8,065,200 (70.4%) in full time employment and 3,383,300 (29.5%) in part time employment, a slight but meaningful shift.
Total jobs growth over this period has been 721,500 jobs of which 374,900 (51.9%) were full time jobs and 345,800 (47.9%) were part time jobs.
While the growth in the jobs market is going through a churn, the overall labour force (people old enough to work) has added more people than the number of jobs created, having grown from 11,205,500 to 12,036,600, which is a growth of 831,100. So with only 721,500 new jobs being created over this same period it means another 109,600 new entrants to the labour force were added to the unemployment lines.
We need to watch what happens in the second half of 2011 as labour market growth appears to be slowing.
The data provided by the ABS clearly shows how the labour market has changed since the beginning of the GFC. According to the ABS in December 2007 there were 10,726,000 people employed, with 7,690,300 (71.6%) in full time employment, and 3,036,000 (28.3%) in part time employment.
According to the latest ABS data there are now 8,065,200 (70.4%) in full time employment and 3,383,300 (29.5%) in part time employment, a slight but meaningful shift.
Total jobs growth over this period has been 721,500 jobs of which 374,900 (51.9%) were full time jobs and 345,800 (47.9%) were part time jobs.
While the growth in the jobs market is going through a churn, the overall labour force (people old enough to work) has added more people than the number of jobs created, having grown from 11,205,500 to 12,036,600, which is a growth of 831,100. So with only 721,500 new jobs being created over this same period it means another 109,600 new entrants to the labour force were added to the unemployment lines.
We need to watch what happens in the second half of 2011 as labour market growth appears to be slowing.
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