While the weak labour force data released on Thursday were a bit of a surprise, I remain confident the Queensland economy will pick up considerably over the next year, and I broadly agree with Queensland Treasury’s assessment here (Labour Force: July 2011):

Leading indicators, such as ABS Job Vacancies, suggested jobs growth will strengthen later in 2011. This should be supported by a recovery in agricultural employment following the floods and continued momentum in business investment, led by resource sector activity in particular. However, recent heightened financial market volatility may weigh on business confidence and hiring intentions in the short-term.

I disagree a little about the heightened financial market volatility as weighing on business confidence. Anyone working in Brisbane CBD is well aware of the massive influx of money associated with the resources boom and would quickly discount the recent fits of irrationality our financial markets have displayed. Ultimately, the real economy drives the financial markets. The late, eminent North American economist John Kenneth Galbraith said it best in the context of the 1929 stockmarket crash (in his superb The Great Crash 1929):

…the stockmarket is but a mirror, which, perhaps as in this instance, somewhat belated, provides an image of the fundamental economic situation. Cause and effect run from the economy to the stockmarket, never the reverse.