While the unemployment rate appears under control for now, the storm clouds are gathering. And if they arrive, the heroic forecasts in the last budget will need to be quickly reassessed, writes Ian Verrender.

In a world of turmoil, those seeking to top up the half full glass were rewarded last week with some rare good news on the economic front. Unemployment appeared to be under control.

Long projected to move towards the upper end of the 6 per cent band this year, for months the jobless rate has surprised forecasters, last month remaining at 6 per cent after the previous month had been revised down to 5.9 per cent.

It's been a rare bright spot for the Government, having swept to power more than 18 months ago with a promise - among a great many others - of creating one million new jobs in five years.

With deficit reduction no longer a topic for polite conversation on the front bench, employment has been the sole area for ministers to gleefully expound on economic policy success.

So far, about 271,000 jobs have been created since the Government won office in late 2013, which sounds like a pretty impressive record if you ignore the effects of a rising population.

The problem is, the Government is falling well short of its own target. On a simple trend line, for it to achieve its lofty goals by 2018, about 350,000 new positions should have been added so far.

When it comes to employment, from a perspective of economic performance, it is always best to aim high rather than set a low bar in order to achieve a low and achievable goal for political kudos.

Unfortunately, the prospect for jobs is becoming increasingly clouded and looks set to deteriorate sharply in the next 12 months as a result of the economic transformation foisted upon us by the sudden end of the resources boom.

Should that occur, the heroic forecasts in the recent federal budget about a return to surplus by the end of the decade will need to be quickly reassessed.

Higher unemployment has a double whammy effect on Commonwealth finances. It strips the coffers of income tax revenue. And it means greater outlays in social security payments.

In addition, higher unemployment means greater competition for jobs, which, in turn, results in weaker wages growth.

That may please Tasmanian senator Eric Abetz - who last year famously warned that Australia potentially was in the grip of a wages explosion - but it will not please Treasurer Joe Hockey.

Already wages have been growing at about their slowest pace in 20 years.

But the Treasurer is gambling on a sudden boost to wages growth to help swell income tax revenue, via the magic of what is known as bracket creep. The chances of that occurring are fading fast.

There are a number of storm clouds building on the employment front, starting with the shutdown of the automotive industry, and the flow-on effects that will have on other manufacturing industries from steel production through to component suppliers.

Then there is the sudden collapse in commodity prices. Uneconomic resource projects built at the peak of the boom will shut, while planned investment in new projects has begun to evaporate at a rate much quicker than anticipated.

The problem is, apart from a housing boom in parts of the eastern states - that has now run out of control - very little industry is emerging to absorb the jobs that will be thrown off by end of the resources construction boom.

South Australia already has become something of an economic laboratory experiment in this regard. Unemployment soared to 8.2 per cent in June, up 0.6 percentage points in the month, according to last week's official figures, and neither the federal nor state governments have any clear plan on how to arrest the slide.

Its once heavily subsidised manufacturing industries - from clothing to cars - have either left town or are packing up while the resource projects that helped propel the currency to levels that signed the death certificate for manufacturing are desperately slashing costs and looking to lay off workers.

To a large extent, these factors are being driven by forces well beyond our control.

The ructions on China's stock exchanges during the past month, and the increasingly desperate responses from Beijing to arrest the decline, have exposed just how tenuous the global economic recovery really is.

Should China's middle class - most of whom would be among the 80 million retail investors caught up in the stock market crash - suddenly find itself without the means to drive China's transformation to a consumer economy, our service industries will find it tough going in the newly opened Chinese economy.

But the greatest impact will come from the squeeze in resource prices. At one stage last week, iron ore prices plummeted 11 per cent in a day before recovering 10 per cent the next day.

Once again, iron ore is under $US50 a tonne. And while most of our miners have slashed costs, their profits are being squeezed, which means they will pay far less tax.

None of this provides a great deal of hope for budgetary repair. The International Monetary Fund once again downgraded its outlook for global economic growth last week to 3.3 per cent, the slowest since the financial crisis, highlighting China as a cause for some concern.

Joe Hockey's May budget, by contrast, was a document brimming with optimism.

After slowing dramatically last year to 2.5 per cent, the economy suddenly and inexplicably is scheduled to expand by 2.75 per cent this financial year, rising to 3.25 per cent next year, before miraculously returning to its long-term growth trend of 3.5 per cent. That was the kind of growth we were notching up during the golden days of the resources boom.

If true, we could be looking at 30 years of uninterrupted growth, thereby eclipsing Holland for the world record.

But the source of this sudden growth spurt? Therein lies a mystery.

Ian Verrender is the ABC's business editor.