Jobless figures heading south


Published in the Geelong Advertiser, September 2013 by Dale Gillham

Australian labour force data recently released indicates that unemployment has hit a four year high of 5.8 per cent, and media reports have stated this is in line with economist’s forecasts. 

Why attempt to gloss over what has occurred by stating that unemployment matches a forecast when we can all see that the numbers are still going the wrong way?

What you may not be fully aware of is that a person is classed as employed if they work a minimum of one hour per week. 

So why measure it this way? Believe it or not, this is a global standard. 

Perhaps it helps to be able to keep the unemployment numbers small in a time of crisis or when the economy is soft so that the people are less likely to remain concerned.

From time to time one of my students will ask me about these numbers and my response is to suggest that we will know the economy is really improving when we see confirmation that the employment numbers are moving in the right direction. 

In my line of work I am required to make forecasts about stocks and markets all the time and I teach others how to do the same, however, my students know that I don’t buy on a forecast, I buy when a stock has confirmed with high probability that it is likely to continue to rise. 

So, before taking any comfort in the numbers, I suggest we wait for confirmation that the situation is actually improving.

So what do we expect in the market?

This week we have finally seen the Australian share market trade through the prior high of 5229.8 points, which bodes well for investors over the coming months. 

Given this, not only is our market on track to trade towards the upper band of my first target zone between 5200 and 5400 points, the analysis now confirms that a rise towards the next zone between 5600 and 5800 points is probable as we look further ahead.

Now this doesn’t mean its time to throw caution to the wind and buy any stock. 

You may have heard me say that although many stocks will rise in a rising market it is also common to see some stocks fall. 

One further important point to remember is how the top I have been talking about for some time is still on the radar for the period from the last quarter of 2013 to the first quarter of 2014. 

Currently the analysis is pointing to the latter part of this time period, which will coincide with company reporting season next year. 


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