Australia | Sep 08 2008
By Andrew Nelson
With substantial falls in both newspaper and internet advertisements for August, a case for more rate cuts sooner is beginning to build. In fact, the news has ANZ thinking twice about its overall employment outlook for the year.
Total job advertisements fell 4.9% in the month of August, with newspaper advertisements particularly weak, down 4% following a 5.2% decline in July. All in all, Newspaper ads are now 25.8% lower than a year ago, with 24% of the downturn coming in just the last four months.
The 5% fall in Internet advertisements has the read sitting at below the level it was at a year ago, the first time that has happened since 2003.
ANZ Head of Australian Economics Warren Hogan believes the numbers are indicative of a significant slowing in hiring intentions across Australia and highlight the risk of an even more rapid slowing of employment growth than had been previously expected.
While the bank had been forecasting unemployment to be around 5% by mid 2009, more declines of this magnitude may see ANZ change its expectation of only a modest increase in the unemployment rate for the year.
While the read was down across almost all states, it was particularly weak in Victoria and Queensland, down 7% and 6% respectively, while the Northern Territory suffered a 13.3% decline. Losses in NSW, WA and Tasmania were more moderate, slipping 3.3%, 2.4% and 2.4%. The one bright spot was South Australia, with ANZ pointing out it was the he only state to post an increase in August job advertisements after a big drop in July.
Hogan says the overall trend is consistent with other domestic spending indicators that have slowed markedly over the first half of 2008. He says that together, the trend not only supports the recent rate cut, it adds to the case for another 25bp reduction before year end.
Further, he predicts that if the current weakness in job advertisements translates into rising unemployment in 2009, the rate cuts are almost certain to continue next year.