The unemployment rate reported today for March shocked economists. The consensus estimate was for a 5.4% rate, a mild uptick from 5.3% in February. The actual result – 5.7% – was significantly worse than expected. In human terms, this meant the number of people in full time work fell by 38,900 compared to the consensus estimate of 25,000.
I’m not sure what planet these consensus economists are living on. It should be no news flash that the Australian economy is rapidly deteriorating. You don’t need to wait for the numbers, just go and talk to a few people on the street. Redundancies continue apace across the commercial sector. Architects, investment bankers and recruiters were already in bad shape. And with the mining and construction sectors now laying off thousands of workers, the situation is becoming dire.
We’re not in the business of making specific economic forecasts at The Intelligent Investor, but it seems obvious to me that predictions of a gradual increase in unemployment are way off the mark. Investors expecting gentle changes in macroeconomic settings should revise their assumptions. Things are tough and getting tougher.