6 July 2020
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One day, I hope I can say I was wrong and RBA boss Glenn Stevens was right but I need a few months of economic watching.

Great job numbers so I'm nearly saying sorry to Glenn Stevens!

Peter Switzer
13 November 2015

By Peter Switzer

It takes a big man to admit he’s wrong and while I’m not sure if I’m wrong on the RBA and what I called their craziness in not cutting interest rates on Cup Day, I am prepared to say that not cutting mightn’t be as disastrous as I thought it could’ve been.

One day, I hope I can say I was wrong and RBA boss Glenn Stevens was right but I need a few months of economic watching before I become a big man!

Why the change of heart? That’s easy — we got great job numbers on Thursday and while some of my media mates want to question them, helped along by economists whose predictions were way wrong, the thrust of the figures augurs well for the economy and, hopefully, the stock market.

This whole economic story of late has been very conflicting for me. I’ll explain that after giving you the latest on jobs from the ABS. This is what we learnt yesterday:

• October brought the biggest spike in jobs in seven and a half years!

• Employment rose by 58,600 jobs!

• 40,000 were full-time!

• 315,000 jobs have been created in one year!

• The participation rate rose!

• State-wise, NSW went from 5.8% to 5.5%, VIC 6.3% to 5.6%, QLD 6.3% to 6.2%, SA 7.7% to 7.5%, while WA went up from 6.1% to 6.4% and so did TAS 6% to 6.5%.

Okay with that revealed, I do admit they’re so good they worry me but I’m not looking a gift horse in the mouth. I’m thinking the Turnbull ‘turn on’ effect and its hit on confidence added to this improving jobs picture has the potential to really push our growth into the 3% band next year.

Regular readers know I’ve been tipping this was possible and that’s why I worried that the banks raising rates to pay for their imposed capital raisings could hurt this improving economic picture. I’m still worried about that but less so since those job numbers and that’s because this labour market improvement even surprises this optimist! However, I’ll take and believe it until the ABS is shown to have computer models doing drugs!

The RBA recently told us that the September quarter was looking better than expected, growth-wise, and it also suggested that the labour market was looking good but not as good as it did this week.

Certainly, job ads have been very impressive so this number should not be a total shock. That said, I think the trend numbers, which aren’t as bullish, are probably telling the truer story of an improving labour market but one that’s not on as many steroids as the seasonally adjusted ones that we report each month.

Of course, if the story is closer to the truth than economists want to believe, then greater growth means greater profits and better stock prices lie ahead and to that I say “yahoo!”

And if all this comes to pass, I’ll be happy to be a big man and say sorry to Glenn Stevens. In fact, as I’ve already said, I damn well hope I have to apologise to Glenn because I’ll be wealthier, thanks to better share prices.

On the back of these job numbers, if they were totally believed by economists and the media, I’d be tipping our stock market to rise today but Wall Street was pretty negative overnight, on lower oil prices and continued concerns about a December rate hike by the Fed.

The final conclusion for our part here in Australia is that I’m much happier we got better than expected job numbers, which some economists and media doubt, rather than really bad ones, which the media, in all likelihood, wouldn’t even stop to question! My mates are like that and I don’t like it for the sake of jobseekers and employment-creating businesses out there!


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