Australia | Nov 09 2009
By Chris Shaw
Having risen by 4.4% in September, Australian job advertisements took a breather in October with the ANZ Job Ads series recording a decline of 1.7% for the month. Total job ads fell to a weekly average of 133,709, with both newspaper and internet ads declining during the period.
The fall was slightly heavier in internet ads, down 1.8% to an average of 124,909 per week, which means they remain more than 40% lower than was the case this time last year. Ads in major metropolitan newspapers declined by 1.4% to an average of 8,800 per week and while this is 10.6% higher than the low for the cycle recorded in March, it is 33.8% below the level of 12 months ago.
In trend terms total job ads appear to have bottomed out and are now heading higher, as total job ads rose 1% in the month on this basis, though the turn comes from very low levels as the number of total job ads remain 44.9% lower than for a year ago.
According to ANZ acting chief economist Warren Hogan the data shows Australia’s economic recovery remains vulnerable to setbacks, especially as job ads in newspapers are still at levels less than half the recent cyclical peak. During the downturn the trend was for hours worked to be cut rather than actual cuts in employment numbers overall, which meant rising under-employment rather than an increase in unemployment itself.
As the economy recovers the trend in hours worked is expected to improve before total employment numbers begin to grow strongly, which in Hogan’s view implies it will be some time before the economy shows sustained net jobs growth. Shorter-term he expects broadly flat employment growth over summer, which implies unemployment will creep higher to just above 6.5% by the middle of next year. On Hogan’s numbers, unemployment is likely to peak at around 6.6%.
The make-up of the job ad data for October also supports Hogan’s view the Australian economy remains soft, as the mining intensive states of Western Australia and Queensland recorded the weakest job ad numbers while numbers in smaller states such as Tasmania have continued the trend of stronger growth in recent months. Numbers in New South Wales and Victoria reflect a modest recovery in labour demand.
This mixed data leads Hogan to suggest the Reserve Bank of Australia won’t lift interest rates again at the next board meeting in December, as while some normalisation of official interest rates appears justified, too rapid an increase in the near-term could pose some risks to growth. If the economic recovery continues into 2010 however, Hogan suggests there may be further increases to rates early in the new year.