Swan warns of even higher unemployment

The Senate's rejection of the federal government's $42 billion stimulus package will
mean even higher unemployment, Treasurer Wayne Swan has warned.
The Senate rejected the Nation Building and Jobs Plan on Thursday, putting at risk
$12.7 billion in cash handouts to tax payers and a major infrastructure investment
program.
Mr Swan said the opposition had voted against jobs.
"Their actions over the past week have effectively sabotaged the Australian
economy," he told parliament.
The failure of the package came as Australia suffered its biggest monthly jump in
the unemployment rate in more than seven years.
The jobless rate unexpectedly lurched to 4.8 per cent from 4.5 per cent the previous
month - its highest level since June 2006 - keeping alive the risk of a further
interest rate cut next month.
"(The data) clearly indicates that the global recession is bearing down on the
Australian jobs market," Deputy Prime Minister Julia Gillard said in a statement.
The government had predicted the jobless rate would rise to 7.0 per cent next year,
even with the positive effects expected from the stimulus package blocked in the
Senate on Thursday.
Deputy Opposition Leader Julie Bishop said the data showed the government had failed
to create the 75,000 jobs it promised would result from its original $10.4 billion
stimulus package released last year.
"The government should learn the lessons of the failure of the first cash splash and
focus its efforts to stimulate the economy on job creation," Ms Bishop said.
Still, a new poll showed the coalition was losing its long-time grip as the party of
sound economic management.
The latest Newspoll showed 39 per cent of respondents thought Labor could best
handle the economy, against 40 per cent for the coalition, a 13 per cent slump for
the former government since the October 2007 election.
In the same period, confidence in Labor's economic management rose from 29 per cent.
Despite this vote of confidence in the government, consumers are still concerned
about their job prospects.
The Westpac-Melbourne Institute consumer unemployment expectations index rose 1.3
per cent to a 26-year high in February - the second highest reading since the series
began in 1974.
Westpac senior economist Anthony Thompson said it implied consumer labour market
pessimism was at recessionary levels.
"That can only reinforce the consumer impetus to increase savings courtesy of boosts
to disposable income from aggressive rate cuts and fiscal handouts," he said.
Despite the worrying rise in the jobless rate in January, the number of people
employed actually rose by a slim 1,200 when economists had expected a sharp fall.
This reflected a massive, if not unbelievable, 33,700 increase in the number of
full-time workers - partly reversing the 48,000 slump in December.
This was all but offset by a sharp drop in part-time employment, again largely
reversing a jump in December.
"Given the volatility in the data, the unemployment rate provides a much better
reading of the labour market at present," National Australia Bank senior economist
Spiros Papadopoulos said.
Forward indicators of employment, such as the ANZ job advertisement series, are
pointing to a sharp decline in jobs growth in coming months.
RBC Capital Markets senior economist Su-Lin Ong said the jobs data were consistent
with last week's Reserve Bank of Australia quarterly statement that noted labour
market conditions had begun to soften and more "significant rises" in unemployment
were likely in the period ahead.
"This remains consistent with further rate cuts and the likelihood that the cash
rate remains at an unusually low level for a sustained period of time," Ms Ong said.