Aust job ads rebound in June, positive trend but negative budget mood remains

A partial rebound in Australian job ads provides encouraging signs for the labour market, according to the ANZ job advertisements series, a leading employment and economic activity indicator. 

Job ads rose 4.3 per cent in June following a 5.6 per cent fall in May – the sharpest fall since May 2011 – after a slump in consumer confidence linked to the Federal Budget announcement. 

“The bounce in June really makes us a bit more confident about the outlook for the labour market,” says ANZ senior economist Felicity Emmett. 

“At the same time as we saw that fall in May, we saw a really steep decline in consumer confidence. This bounce in job ads suggests to us that business confidence has remained quite resilient, despite the weakness in consumer confidence.“ 

Emmett added: “We expect we’re going to see quite modest gains in employment going forward and while that should keep the unemployment rate from rising much further, it’s probably going to keep it at around the level it is now for some time. We don’t really expect to see any significant improvement in the unemployment rate until later next year.” 

According to ANZ Chief Economist Warren Hogan the improvement in the series owed more to new media than old.

“The improvement in the month was driven by a bounce in internet job ads (+4.5 per cent month on month), while newspaper job ads, which make up only around 5 per cent of overall ANZ job ads, fell 2.3 per cent,” he said. “The latter likely reflects some ‘statistical payback’ after rising 7 per cent in May but newspaper job advertising has been particularly volatile in recent months.”

Hogan noted the job ads series added to a feeling momentum in Australia’s economy appears to have softened in recent months, clouding the near-term outlook. 

“The silver lining is that recent indications suggest the US economy is picking up steam,” he said. “This raises the potential for the $A to depreciate with our currency strategists expecting a gradual decline to $US0.87 by the end of next year - a development that would clearly support growth domestically. However, these new downside risks highlight the likelihood of a fairly gradual turnaround in economic activity, and in the cash rate. ANZ forecasts the cash rate to remain on hold this year, before gradually increasing through 2015.”

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