Australia | Apr 06 2010
By Chris Shaw
Australian labour demand has continued to show signs of strength as total job advertisements in March rose 1.8% according to ANZ Banking Group. Job ads are now 8% higher than in March last year.
While the result was only a small increase, the bank's chief economist Warren Hogan regarded it as a strong outcome given it followed the 19.1% increase recorded in February. Total job ads are now 29.9% above the cyclical low of July 2009, but they are still 41.6% below the all-time peak of April 2008.
The bank's Job Advertisements Series for the month showed newspaper job ads were down 1% from February, though they are now up 20.1% from this time last year. In trend terms the number of newspaper job ads rose 0.7% in March in month-on-month terms. They are up 14.5% in year-on-year terms.
Internet ads rose by 2% in March in seasonally adjusted terms, which followed the 19.6% increase recorded in February. Internet job ads are now up 7.3% from a year ago, the March outcome being the first positive annual growth in this category since August of 2008.
According to Hogan, the data imply stronger labour demand, which is translating into solid employment growth and lower unemployment. This is the case even allowing for the current strong growth in both Australia's population and the size of the labour force.
Hogan's numbers indicate total employment in Australia hit a record of 11 million in February, with around 70% of these jobs being full-time positions. February also showed an increase in aggregate hours worked, up 2.4%.
Unemployment is now around 5.3% and Hogan expects it will continue to ease through 2010, though there may be short-term volatility in jobs and hours worked numbers. Over the coming year Hogan expects the unemployment rate will stabilise at around 5.0%.
Forward indicators support this view as job ads surveys continue to improve, business sentiment and expectations are relatively strong and business investment and construction are regrouping. Labour demand should translate into jobs growth of around 12,000 in March, though Hogan notes any increase in the participation rate above the current 65.2% will see unemployment tick higher.
In Hogan's view the Reserve Bank of Australia (RBA) will lift the cash rate by 0.25% at today's meeting. This should contain growth and moderate the inflation risk in what remains a strong economic environment.
An increase in the cash rate would move rates closer to a neutral setting, Hogan suggesting an early return by the RBA to a neutral environment will reduce the risk of inflation and larger interest rate increases later in the economic cycle.