Australia | Nov 03 2008
By Andrew Nelson
Need more proof the Australian economy is under increasing pressure from the world’s economic crisis? Well look no further, job ads have fallen again in October, with internet job advertisements booking their third fall in a row and the fourth monthly decline in the past six months, while newspaper job advertisements are at their weakest point since 2001.
Looking at the numbers, ANZ reports that the total number of jobs advertised in major metropolitan newspapers and on the internet fell by 5.9% in October to a weekly average of 231,135 per week. This latest read follows on from a 1.4% decline in September. Compared to last year, October was 9.8% lower than 12 months ago, while in trend terms, the total number of job advertisements fell by 2.6% in October to be 7.6% lower than 12 months ago.
No matter how you slice it, it still paints the same picture of a weakening jobs market haunted by the spectre of increasing unemployment.
ANZ Head of Australian Economics Warren Hogan said that the latest job advertisements data suggest the global financial crisis has had and is having a significant impact on the Australian economy. In fact, he sees this series over next few months as being an important indicator of the extent of the downturn in the Australian economy and the likely direction for unemployment over the next few years.
Breaking it down, the number of job advertisements in major metropolitan newspapers decreased by 12.2% in October to an average of 13,350 per week. This follows a 0.7% rise in September. The large fall in newspaper job advertisements in October was driven by declines in all states and territories, ANZ noted. Newspaper advertisements are now 34.7% lower than in October 2007 and in trend terms, the number of newspaper job advertisements fell by 4.6% in October to be 32% lower than a year ago.
The number of internet job advertisements was barely better, falling by 5.5% in October to average 217,785 per week, down from April’s peak of 255,456. This was the third consecutive fall in a row and the fourth monthly decline in the past six months, reports ANZ. In trend terms, internet job advertisements fell by 2.5% in October to be 5.5% lower than 12 months ago.
Hogan notes the real problem lies with the downturn in newspaper advertising. Annual growth in newspaper ads is now the weakest since 2001. Back then, says Hogan, the economy avoided recession, but the unemployment rate jumped by a full percentage point. The only weaker reads we’ve seen over the last 30 years were in 1991 and 1982 and then the economy was well and truly in a recession.
That said, Hogan is only expecting unemployment will rise modestly to 6.5% by 2010, as the current slowdown is not the result of poor corporate performance as was the case in 1991. Right now, businesses are still profitable for the most part and balance sheets are still in pretty good shape. So unlike 1991 and 1982, he does not expect corporate Australia to respond to a slowing economy with widespread labour shedding.
He cautions there is still a slow down going on and corporate Australia’s response to it is still fairly unknown. If there were an eventual reaction similar to 1991, Hogan postulates, the result would not only be higher unemployment, but also “weaker consumer demand, lower corporate profits, rising mortgage delinquencies and defaults, and falling house prices”. But that’s his worst case scenario.
Otherwise, Hogan is fairly upbeat in his assessment and reminds us (as have many of late) that the Australian economy is still in a pretty good shape. Not only are we not in recession, says Hogan, but unlike many industrialised economies around the world, the Australian unemployment rate is hovering just above 30 year lows.