Weakest employment growth in two decades: Expected to be worse this year.

Australian Bureau of Statistics figures released today show Australia lost 29,300 jobs in December. For the year, there was close to no new jobs created making job growth last year the worst since 1992.

Unfortunately this year is not expected be any better. Excessively high levels of household debt and house asset prices has seen growth in mortgage lending fall to levels not seen since world war II and left banks no choice but to start slashing staff numbers. UBS expects banks will slash 7,000 jobs over the next two years as banks align to a lower growth environment.

And pain is not limited to mortgage lending. Australian households are trying to deleverage after a decade of binge spending where households spent more than they earned for a number of consecutive years. Rising property prices and the wealth effect made spending beyond your means not only fashionable, it also appeared sustainable. It wasn’t as if you didn’t have the money, it just wouldn’t be realised until the sale of your home.

Household net savings have now sprung back to around 10 per cent to levels not seen in 25 years coincidently starting the same month than the collapse of Lehman Brothers. The paying down of debt and extra savings is thought to have wound back some discretionary spending, causing retail sales to decline and making it the worst period for retailing in a couple of decades.

IBIS World’s Ian MacGowan told the Sydney Morning Herald, “The period from 1998 to 2008 was a boom time, a golden era, for retailers, with well above average growth as Australians spent large sums on their credit cards and hire purchase”

This supported extra retail jobs that are no longer needed today with more prudent discretionary spending. Andrew McClennan, a retail analyst with the Commonwealth Bank said “there is no doubt there are going to be significant layoffs through further business failures.”

Some analysts are expecting a wave of retailers entering administration in March, while others will close stores and/or layoff staff.

» Thousands of bank jobs face axe: UBS – The Sydney Morning Herald, 16th January 2012.
» Retailers brace for job cuts – The Sydney Morning Herald, 18th January 2012.
» Debt Bubble Cripples Retail Spending – Who Crashed the Economy, June 8th 2011.


  1. So did debt crash the economy then?

    Maybe if it did, then hunt done the bastards that porned it out and facilitated it. All hail our banks for getting us addicted to debt, now we get to enjoy a decade of deleveraging that will destroy the average persons wealth, their power etc etc. I hope Ralph Norris is enjoying his retirement having the knowledge of the legacy he has helped to leave behind.
    Oh and did I mention the average Aussie is as thick as a plank when it comes to money. gotta love the national education system that teaches us to be poor. The great propaganda machine is workin just fine….

    Please note the 30 yr mortgage rate fell in the US today to 3.88% . Imagine how many idiot Aussies would borrow to the hill if we could get our hands on those rates!

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