If the Reserve Bank was populated by scientists rather than economists, people in white coats would become a common sight on Sydney's streets in the months ahead, capturing local specimens to search for payslips and record the contents of their wallets.
Thursday's labour force statistics effectively declared Sydney the crucible for testing the theory that low unemployment can still cause wages growth.
More BusinessDay Videos
- Video duration
- 01:54
Our debt habit not what it seems
Our debt habit not what it seems
What if the vast majority of Australians aren'€™t suffering debt stress, that the debt they have has made them much richer, and they're getting smarter about debt? Michael Pascoe comments.
Up Next
ASX winners and losers - a snapshot
- Video duration
- 00:43
- Video duration
- 00:43
ASX winners and losers - a snapshot
ASX winners and losers - a snapshot
The stand out listings traded on the ASX captured at key moments through the day, as indicated by the time stamp in the video.
Up Next
Identity theft lessons
- Video duration
- 02:44
- Video duration
- 02:44
Identity theft lessons
Identity theft lessons
Bloomberg's Drew Armstrong discusses the lessons learned from his three years in identity theft hell.
Up Next
The battery revolution
- Video duration
- 03:47
- Video duration
- 03:47
The battery revolution
The battery revolution
Will there be a day when solar plus batteries will start wiping fossil fuels off the grid?
Up Next
Myer to shut more stores
- Video duration
- 00:31
- Video duration
- 00:31
Myer to shut more stores
Myer to shut more stores
Department store Myer will close more stores and expects another difficult year ahead after its profits fell 80 per cent. Vision courtesy Seven News Melbourne.
Up Next
Poll shows unemployment steady
- Video duration
- 03:04
- Video duration
- 03:04
Poll shows unemployment steady
Poll shows unemployment steady
Aberdeen Standard Investments Head of Australia Fixed Income Nick Bishop weighs in on the economy and the "difficult cocktail" the RBA is navigating.
Up Next
OECD sees dangers in economy
- Video duration
- 06:34
- Video duration
- 06:34
OECD sees dangers in economy
OECD sees dangers in economy
OECD Economic and Development Review Committee Chairman William White sees more dangers in the global economy today than in 2007, just before the global financial crisis.
Up Next
Myer closing more stores after weak results
- Video duration
- 00:35
- Video duration
- 00:35
Myer closing more stores after weak ...
Myer closing more stores after weak results
Department store Myer's net profit has tumbled 80 per cent in 2017.
Our debt habit not what it seems
What if the vast majority of Australians aren'€™t suffering debt stress, that the debt they have has made them much richer, and they're getting smarter about debt? Michael Pascoe comments.
New South Wales' June trend unemployment rate was 4.75 per cent – which means Sydney's rate would be somewhat lower given the nature of higher unemployment in the regions.
At, say, 4.6 per cent, Sydney's unemployment rate is below the "about 5" generally quoted nowadays for NAIRU – the non-accelerating inflation rate of unemployment.
Well, that's the theory. The question is whether it stands up against chief financial officers still concentrating on cutting costs, whether a de-unionised private sector workforce is capable of demanding a bigger slice of the pie or even a steady proportion of an increased pie, whether the RBA-perceived threat of robots and foreigners will keep workers covered outside unionised construction and a few other hot spots.
The test – and the flipside of the "it would be nice to have stronger wages growth" mouthing by politicians – is when employers start stealing workers from their opposition by bidding more for them. When there are more private contractors than union members in full-time private sector jobs, it's not the Fair Work Commission that will do the real lifting.
That competition for labour eventually results in the losers -Â the employers not making enough money to pay more -Â failing.
Unless, of course, they can find other sources of labour or become more productive, getting by with fewer workers.
Part of the answer is in the apparent switch to more full-time jobs, which does indeed lift household incomes. It will be an interesting financial year as the closely observed experiment unfolds.
In any event, combined with the most recent NAB business conditions survey and the census' demographic reappraisal, the employment figures confirm the jobs-and-growth appeal of the Melbourne and Sydney "Big Smoke". And that in turn means continued demand for housing.
Employed people tend not to default on mortgages. For all the talking of mortgage stress, it's not showing up in default figures for the two crucial markets that are driving national policy.
29 comments
New User? Sign up