Job ads fall in adjustment overshoot

The softening of the jobs market predicted at MB earlier this year is showing more evidence, with ANZ job ads slowing again in September:

Job advertisements on the internet and in newspapers decreased by 2.1% in September. Annual growth in total job advertisements decelerated to 3.1% y/y.

• Newspaper job ads were flat in September, while internet job advertising decreased by 2.2% m/m. Newspaper advertising is now 12.8% lower than a year ago, while internet advertising is 4.0% higher over the same period, in part reflecting the continuing structural shift to online advertising.

• In trend terms, total job ads fell by 0.6% m/m in September with the annual growth rate slowing to 3.8% y/y. The monthly trend in job advertisements began slowing in January and has been negative since April.

ANZ Head of Australian Economics and Property Research Ivan Colhoun said:

• The number of job advertisements continued to decline in September, falling 2.1% m/m to be just 3.1% above year ago levels. The fall in job advertising was due to a 2.2% m/m fall in internet advertising, while newspaper advertising remained steady. This is the first month newspaper advertising has not fallen since February. Further monitoring of trends in newspaper advertising is warranted over coming months as newspaper advertising tends to lead online advertising trends, notwithstanding the continuing structural change towards online advertising.

• Moderating job advertising points towards a further softening in employment growth in the months ahead and a modest rise in the unemployment rate. To date, the weakening trend for job advertising is more like the 1995-96 experience rather than the sharp slowdown during the global financial crisis in 2008-09 or even the more significant slowdown experienced in 2000-01. During 1995-96 the unemployment rate rose 0.4% between June 1995 and December 1996, while in 2000-01, unemployment rose around 1 percentage point.

• ANZ forecasts the unemployment rate to rise to 5.5% by mid-2012. This forecast is consistent with modest employment growth of less than 6,000 jobs per month.

• In line with a rising unemployment rate, wages and underlying inflation pressures are likely to moderate. Accordingly, there is scope for the RBA to reduce interest rates a little as insurance against weaker than expected growth outcomes and even higher unemployment. We expect the first of two 25bp cuts are likely to be enacted at the next board meeting in November. This would be a prudent move given global uncertainties and downward revisions to global growth forecasts. However, ANZ does not expect the more significant interest rate cuts currently priced by markets and sees only a move back to a more ‘neutral’ stance from a ‘slightly restrictive’ stance at present.

• Trends in job advertising are again beginning to reflect the emergence of a more noticeable geographic split to Australian economic growth. Job advertisements are rising solidly in Western Australia and the Northern Territory and the declining trend is moderating in Queensland (together the states with the greatest exposure to mining). At the same time, advertising is continuing to slow reasonably quickly in NSW and Victoria.

• The ABS publishes September labour force data on Thursday. ANZ expects employment growth of 7,000 jobs and an unchanged unemployment rate of 5.3%.

So, it’s essentially an adjustment overshoot then. NSW and VIC is falling too fast for WA and QLD to absorb. All things being equal, I agree with the ANZ projections, though I think the unemployment rate may rise further owing to an unwind of the labour hoarding phenomenon.

Obviously, however, I don’t expect all things to remain equal on the international front.

111010 – ANZ Job Ads September 2011 (1)

Houses and Holes
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  1. I notice the share market didn’t respond to this and continued to rocket higher. I’m sorry to repeat the question but is the bailout and 50% haircut deal being ironed out in Europe really going to solve all problems? The reaction certainly seems to be yes. The world markets are just booming almost every day recently. They will be up 10% soon from the recent low.

    I know slow growth issues remain such as weak job growth here and elsewhere but it almost feels like the Euro will be A-OK in the next week!

      • +1000
        I also expect the ‘labour hoarding phenomenon’ to unwind after Christmas. Especially in retail services (say Feb/Mar), housing construction/trades, real estate salespersons.
        With retail, I imagine most retailers hands are tied in that they must hold onto staff to get through the busier trading period in the lead up to Christmas, then the busy sales/school holidays period. Most will then take a look at those results and decide if they were strong enough to cushion them, or (as I expect) slash and burn going into the new year.
        I expect it to be nasty.

      • I understand that H&H. I know long term the issues are just too big to bailout. However, just looking ahead 1 month for example, will it seem that people will be thinking we have solved the Euro-debt crisis.

        Just in the context of Greece though, surely there must be some significant pain from a 50% haircut and bank bailout (in terms of government debt). Will markets really be happy to hear of a 50% haircut? Or are they just cheering the socialization of private insolvency?

    • “I notice the share market didn’t respond to this and continued to rocket higher”

      its short covering tomec. the weak shorts are panic buying.

      • Move the map around and check the suburbs around the Sydney CBD especially north. It looks pretty bad.

    • Cheery. It looks like being an aspirational, educated middle-class Aussie is a very bad idea at the moment.

      While the official UE rate is low by standards of the past 30-odd years it’s the current rate of increase, particularly in some geographical areas and industries, that’s worrying.

  2. House prices falling will trigger more job losses. Less people working or worried about job security will lead to fewer buyers and further reductions in house prices.

    Lower interest rates will result in lower dollar and higher import costs. Petrol prices increase. Inflation steals money from savers.

    Local businesses hope to increase exports but other countries raise tariffs and besides demand decreases worldwide as people pay off debts and try to save money.

    All of this might have been prevented if governments had regulated the banks properly and not allowed the real estate property bubble to form in the first place.

    Ponzi schemes are illegal and should be stamped out quickly. It has been obvious to many of us for a number of years that house prices cannot double every few years without consequences to society. Economic terrorists have been rewarded with huge bonuses . Why haven’t the bankers been thrown into jail?

    • The bankers just gave people what they wanted…if you want to live in a capitalist society you have to allow for the profit motive. Bankers did the best they could with the set of rules they were given. Don’t hate the playa.

      • …hate the game?

        The truth is while the Governments of the world should be punished very harshly for blowing bubbles and taking advice from the fox on how to guard the chickens, the foxes here were hardly starving before and it is their greed for more and more that made them try to get it. So they too are largely to blame.

        Since the bankers did gain a lot from their collusion in this issue, they should be asked to fix it. It should not fall to the majority of taxpayers. If they are going to confiscate someone’s money, it should be the bankers.

        • What laws were broken? I agree that we would all be better off if things were different but the bankers just exploited what was there, you might not do the same but you can hardly call for people to be thrown in Gaol for trying to make a buck.

          How do you feel about the Nike executive who sells you a pair of runners built on the suffering of a 3rd world community…should we put them in Gaol too?

      • Ponzi schemes are not only found in capitalist societies. A ponzi scheme is illegal no matter where it is allowed to fester. We have laws in Australia to protect consumers.

        Never ceases to amaze me that bankers are always capitalists when they make obscene amounts of money but quickly become die hard socialists when they come begging for government bailouts. No doubt our four pillars will cry they are too big to fail.

  3. “ANZ expects employment growth of 7,000 jobs and an unchanged unemployment rate of 5.3”

    be very suprised if jods are added and unemplopyment remians steady. the last 2 months UE has ratcheted up 0.2% per month. i reckon that trend remians in place.

      • it is very volatile and i reckon its undershooting. depends on the sample i guess. i wouldnt be suprised to see a real stinker coming up soon though like .3% or.4% increase over the next couple of months. we are at the stage now where the downward spiral in falling house prices, rising unemployment accelerates. World was also ending in September…..

  4. > Lower interest rates will result in lower
    > dollar and higher import costs. Petrol
    > prices increase. Inflation steals money
    > from savers.

    I am already seeing higher prices of imported IT&T goods being announced by our business partners and everyone blames the exchange rate. Most distributors that we work with keep very little if any stock to improve their cash flow and they order when they receive orders. Therefore the impact of the falling AUD is immediate.

  5. so we are now seeing the same leading indicators we saw in around half of the bubbles that have burst, specifically:
    1. RE listings surge
    2. employment becoming volatile and rising (lagging indicator)
    3. consumption/retail suffering severe declines (gerry harvey commented around 10% of retail needs to go)
    4. feedback loops beginning to accelerate.
    but i thought it was different here?

  6. Energywonk, it’s “different” this time. It’s ALWAYS different “this” time…lol

    The amazing thing is that most still look at this as a potential global inflationary spiral, leading to a global depression, rather than a much more probable (imo) global DEflationary spiral (because of the housing price eventual collapse) leading to a global depression. (with many not even considering the global implications)