Australian unemployment –

Posted on 18 August 2010

Suffering from bandwidth constraints hence the brevity of posts – but still let’s introduce a couple of charts on Australian labour force, for example headline unemployment:

Now given the mix of employment growth over the last decade (construction, services and retail with mining contributing strongly recently), the auspices suggest that the best of the unemployment numbers are behind us.

Which, given that CPI has been scraping along the bottom for a league or two, suggests that the best of days for the misery index are behind us:

For the uninitiated, the Misery Index is simply the unemployment rate plus the inflation rate. I’m yet to find raw long term data for Australia, but here’s the US experience (US data here) with the S&P500 in log form as an overlay:

Or to view it a little differently, following is the misery index with the performance of the S&P500 mapped as the percentage change in the last 12 months average against the next 12 months average. A cursory glance suggests that if you get your timing right on the misery index peaking, the next 12 month return is pretty attractive. We might come back to this….