Official cuts to interest rates appear to have failed to boost employment, as job ads fall for the 11th straight month.
ANZ bank’s monthly job ads figures fell 0.9% in January, following a 15% slide in the last four months of last year, although the figures need to be read with caution given December and January are subject to large seasonal swings.
ANZ said that February and March data should provide a better indicator of where the jobs market is heading. ANZ expects the official unemployment rate to rise slightly to 5.5% for January. The Australian Bureau of Statistics is due to release official unemployment figures this Thursday.
ANZ economists have suggested job advertising is a key barometer of economic activity and business confidence. The ongoing weakness in job ads suggests that conditions for a large number of Australian businesses remains challenging and the outlook uncertain.
The Northern Territory, with its mega-LNG projects relative to its GDP (gross domestic product), saw newspaper ads rise by 7%, while Tasmania was the only other state to record a rise.
We’ve seen several companies recently cutting jobs, including Boral Limited (ASX: BLD), which recently announced plans to cut around 1,000 employees, and Fortescue Metals Group (ASX: FMG) scaling back its expansion plans and sacking staff, while QBE Insurance (ASX: QBE) and National Australia Bank (ASX: NAB) are also rumoured to be cutting jobs.
ANZ expects the unemployment rate to rise to 5.75% later this year, which could prompt the Reserve Bank of Australia (RBA) to cut official cash rates. The central bank meets tomorrow, but markets are expecting the cash rate to be kept at 3% for the time being, despite the continuing falls in job ads.
The Foolish bottom line
As the Australian economy transitions from one led by the mining sector, on the back of the resources boom, to one less reliant on mining investment, we could see unemployment figures jump and GDP growth slow. After 21 years of uninterrupted growth, 2013 could be the year when Australia falls into a recession. That could have a significant impact on forecasts of massive gains in the stock market.
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