Not long ago, Australian officials were on the defensive about the state of their economy. Just last week, Paul Krugman was in Sydney warning that the Aussies should be preparing for a possible recession, saying “It doesn’t look that nasty so far but there are pretty severe headwinds facing Australia.” Yet new employment data suggests that Australia is defying gloomy predictions for the moment. Bloomberg has the details:
Australian employers added jobs in August, indicating record-low interest rates, a falling currency and weak wage growth is encouraging hiring.
- Employment rose by 17,400 from July; economists forecast a 5,000 increase
- The jobless rate dropped to 6.2 percent; matching economists’ estimates
- Full-time jobs rose 11,500; part-time employment increased 5,900
- Participation rate, a measure of the labor force in proportion to the population, fell to 65 percent from 65.1 percent; matching predictions
It is, of course, dangerous to read too much into one month’s employment figures. But 17,400 new jobs beats the 5,000 estimate more than handily. And David Scutt at Business Insider Australia points out that tourism is up and a survey of the services sector last month indicated expansion faster than anything seen since March 2008.Although we hesitate to agree with all of Scutt’s sunny analysis, the weakened Australian dollar seems to be helping the country weather China’s economic storm for the time being. Readers may recall that Canberra and Beijing inked a landmark free trade agreement last November. The latest news is that embattled Prime Minister Tony Abbott is still struggling to push it through parliament amidst strong union opposition. Deal or no, Australia has made a big bet on China in recent years. We’ll be watching closely to see if its economic improvements continue despite Beijing’s troubles.