Australian job advertisements slumped to recessionary levels in December, a survey showed on Monday, adding to concerns unemployment is set to rise sharply and underlining the case for yet further cuts in interest rates. The grim report intensified worries that government figures due out on Thursday would show job losses accelerated in December, and knocked the local dollar down.
"This result is staggeringly low and suggests that the labour market could be in worse shape than economists expect," said Joshua Williamson, a senior strategist at TD Securities. Analysts had already looked for net job losses of around 20,000 in the official labour report, with the unemployment rate ticking up to 4.5 percent, from 4.4 percent in November.
"If this is the case, unemployment estimates of around 6.0 percent for 2009 are conservative and argues for an extension of the aggressive Reserve Bank easing cycle," added Williamson. The Reserve Bank of Australia (RBA) has already chopped 3 percentage points from its key cash rate, taking it to a six-year low of 4.25 percent.
Yet investors were pricing in a further cut to at least 3.5 percent at the central bank's policy meeting on February 3, and then more easing to 3 percent or lower. Monday's survey from Australia and New Zealand Banking Corp showed the number of job advertisements in newspaper and on the Internet slid 9.7 percent in December from the month before. Ads were down almost 30 percent on the year, a marked turnaround from the start of 2008 when they had been growing at over 30 percent annually.
NEWSPAPERS SUFFER AD DROUGHT The cutbacks were greatest in newspaper advertising, which might also augur ill for earnings at media groups such as Fairfax Media Ltd. The number of job advertisements in major metropolitan newspapers sank 13.9 percent in December, leaving them a massive 51.8 percent lower on the year and the steepest annual fall since the recession of 1982.
"The rate of decline in job advertising intensified in December, providing further evidence that the demand for new labour across the Australian economy is now at recession levels," said Warren Hogan, ANZ's head of Australian economics. Even advertising on the internet, which had been holding up, dropped a sharp 9.5 percent in December. ANZ's Hogan said the jobless rate should rise to around 6 percent by the end of the year with a risk of an even higher outcome given the grim background for global economic growth.
The labour market had been relatively resilient for much of last year as employers were reluctant to shed workers amid a general skill shortage. "That seemes to have changed after the global financial crisis deepened in October and November," said Rob Henderson, head of market economics at nabCapital. "Companies decided they had to get leaner and meaner to survive, and unfortunately that meant job shedding."
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