In the latest IMF Finance and Development journal (March 2023), there is an interesting article…
Manufacturing growing strongly in the UK as jobs fall in Australia with the fiscal cuts
It is Wednesday so a blog lite day for me. The next part of this week is a bit up in the air for me after the Covid outbreak that resulted from a breach of quarantine in Adelaide has spread to Melbourne and looks a bit ugly. Fingers crossed that I can get back home to Melbourne tomorrow. Today I briefly review the latest payroll data from the Australian Bureau of Statistics, which shows that despite all the bluster from the Federal government to the contrary, their fiscal retreat in March is now costing jobs, as predicted. I also examine the latest production data from the UK, which should provide good news for British manufacturing workers. And finally, we have a little birthday celebration with some singing.
Payroll employment falling in Australia
The ABS released the latest – Weekly Payroll Jobs and Wages in Australia – data yesterday for the week ending Week ending May 8, 2021.
So this tells us what the situation is 5 weeks after the Government withdrew its wage subsidy JobKeeper support at the end of March 2021.
The data since then has been a little hard to interpret because it was confounded by seasonal factors – Easter etc.
So the Government has been able to claim that the withdrawal had no impact on employment.
Well, those seasonal factors have now dissipated and yesterday’s release is likely to start picking up the impacts of the fiscal cuts on employment.
And we find that:
Between the weeks ending 24 April and 8 May 2021:
– Payroll jobs decreased 0.5%
– Total wages paid decreased 1.3%
Since the end of March, employment has fallen by 1.5 per cent.
The ABS note that:
There were decreases across the three other large employing industries; Accommodation and food services, Professional, scientific and technical services and Health care and social services (down 3.8 per cent, 2.8 per cent and 2.0 per cent).
The falls have been most severe in small firms, which were probably the more significant beneficiary of the wage subsidy (not in overall sums but rather in terms of the importance to total payroll).
Firms with less than 20 employees saw a 3.3 per cent fall in employment between 24 April and 8 May 2021.
So it seems that the fiscal cuts have had their predictable effect – loss of jobs – despite all the bluster from the Federal government to the contrary.
I will delve into this data in more detail next week when I have more time.
Still not looking like a UK Brexit meltdown
Yesterday, I noted that the public debate is always biased towards advancing the dominant view because some commentators enjoy an almost infinite platform while others, who might have a different view, a denied access to any platform that might disseminate their viewpoint to a wide audience and alter perceptions.
Guys like William Keegan, who writes for the UK Guardian relentlessly advances the woke, Remain viewpoint and doesn’t seem to be able to move on and accept that the UK is out and won’t be going back.
These types have continually predicted a Brexit disaster and claimed that trade would dry up and the manufacturing sector would be destroyed.
They should get out more or at least consult the evolving data.
I looked at the latest ONS trade data in this blog post – The Brexit predictions of doom are proving to be wildly inaccurate (April 20, 2021) – and concluded that goods are still flowing from Britain to the EU as before.
There might be new bureaucratic rigidities but the goods are flowing, which is not the impression the Remainers would like to present.
On May 12, 2021, the British Office of National Statistics published the latest manufacturing data – Index of Production, UK: March 2021 – for March 2021.
The data shows that overall:
1. “Monthly production grew by 1.8% between February 2021 and March 2021 but remained 1.8% below its February 2020 level, the last month of “normal” trading conditions prior to the coronavirus (COVID-19) pandemic.”
2. “The growth in production was driven by increases of 2.1% in manufacturing … The 2.1% rise in manufacturing over the month was driven by higher output in 10 of the 13 manufacturing subsectors, the largest being a rise of 8.3% in manufacturing of machinery and equipment.”
If you go deeper into the data, you see that overall factory production is rising at the fastest rate since December 2018.
Manufacturing output rose by the largest increase since then in March as the impacts of the pandemic start to wane.
Data shows that order books are filling up and an acceleration of production is predicted.
There is a shift in the composition of orders away from exports to domestic sales.
That is a combination of a depressed world market still trying to deal with the pandemic and Brexit.
The British Manufacturers’ Organisation, MakeUK released its – Manufacturing Outlook 2021 Quarter 1 – recently and they noted that:
… manufacturers expect for Q2 2021 the order balances across the board should improve but these will be dependent on the success of the vaccination programme, as well as the possibility of future lockdowns …
Leaving the EU is a disruptive process, but the majority of the sector will survive in the long-run …
In order to avoid the increased cost of moving goods across borders it is relatively cheaper for some to source alternative goods locally …
Most manufacturers reported positive demand conditions in the EU despite leaving the trading bloc.
The other point to note is that overall, OECD nations have:
… reported a 0.7% growth in GDP in Q4 2020, whilst the Euro area reported a 0.6% fall in GDP in Q4 2020.
So it is unclear whether the slowdown in exports to the EU is a consequence of Brexit or the ridiculous fiscal response that Brussels has constructed for the pandemic, which has, once again, seen the Eurozone lag behind other blocs in dealing with the recession.
Anyway, so you can see the time series, here is the index of manufacturing production since January 2016, just before the Referendum. The latest data goes to March 2021.
The impact of the pandemic is obvious.
But it is hard to see a Brexit impact yet.
We will keep following the data but so far despite the horror stories and predictions of doom, it is hard to see any support for these views in the data so far.
Music – Happy Birthday Bob Dylan
This is what I have been listening to while working this morning.
Bob Dylan turned 80 on Monday and over the years I have liked some of his music and disliked other phases.
I was always bemused by the conservatives in the US who tried to claim him as one of their own.
Even when he became an evangelical christian, I don’t think he could be called a conservative. An engima more like it.
Anyway, to celebrate his birthday, I spun an old album from 1968 today – not from Bob Dylan but from a close collaborator from that era – Joan Baez – who, herself turned 80 earlier this year.
She was quite influential in my thinking in the late 1960s as I was evolving into an activist-teenager, especially around Vietnam and the civil rights struggles.
In 1968, she released on Vanguard records the album – Any Day Now – which only had Bob Dylan songs on it.
It was recorded some time after the two of them split up as lovers.
Her interpretation of his writing was quite something.
This is one of my favourite Bob Dylan numbers from that era and so I say happy birthday Bob.
That is enough for today!
(c) Copyright 2021 William Mitchell. All Rights Reserved.
This Post Has 4 Comments
Coincidentally was just listening to “Blood on the Tracks” today. A great album from tip to tail.
An incredible piece of work by Thomas Fazi
I’ve never read anything that compares with this stunning piece of work. It is excellent !
@ Derek Henry, it’s a pity Mario Draghi appears not to have followed his own suggestion (reported in a Bloomberg article last year) that “the ECB should be examining new ideas like MMT”….
Dear Eugenio Triana. Agreed, Blood on the Tracks is indeed a great album, although there are a couple of tracks on side 2 that don’t quite do it for me. Thanks Bill for that lovely Joan Baez cover. There are a couple of tracks on the Bob Dylan Live 1975 (Bootleg Series) Album of the Rolling Thunder Review tour where she joins Dylan for the vocals and really adds to the sound, for instance https://www.youtube.com/watch?v=Etk6lD3RGqQ&list=RDMMEtk6lD3RGqQ&index=1. Also great backing musicians.