Job ads drop in May as inflation pressures remain
Monday, June 6, 2011/
Job advertisements fell for the second straight month in May, making it the first time the economy has seen two consecutive months of negative job ads since July 2009.
The latest ANZ Job Advertisement series reveals total job advertisements fell by 0.5% in May, with the annual growth rate slowing down to 13.5%.
According to the report, the annual growth rate of job ads has been slowing down over the past six months and is now just 8.5% above levels from a year ago.
Total newspaper and internet ads fell by 6.5% in May, although they are both 8.5% above the level recorded at the same time last year. Newspaper ads fell by 2.7% and internet ads dropped by 6.6%.
Newspaper advertising has now fallen for three consecutive months, while internet advertising has fallen for two consecutive months.
ANZ chief economist Warren Hogan says the result was impacted by the late timing of the Easter and Anzac Day holidays, but also noted employment growth has continued to fall.
“The slowing in job advertisement growth in 2011 thus far has been broadly in line with slowing in employment growth,” he says.
“We have seen many monthly economic indicators impacted by seasonal factors related to Anzac Day and Easter falling closely together this year.”
“We suspect the recent dip in job advertising could be overstated because of this.”
Hogan says the job ad figures are similar to those seen in 2010, and that he expects unemployment to remain at 4.9% when data is released later this week.
“Recent stronger investment spending data in Q1, combined with very robust investment intentions, suggest to us that the labour market will strengthen later in the year as capital investment picks up,” Hogan says.
“We expect the unemployment rate to gradually trend down over the year ahead.”
According to the report, newspaper job advertising has been soft across most Australian states, and NSW and the Northern Territory have the strongest newspaper job ad markets in 2011.
“Looking forward, evidence of the multispeed economy is likely to become more pronounced as the investment boom gets underway over the next two years,” it says.
“We would expect WA, Queensland and NSW to experience the strongest labour markets.”
ANZ says with the unemployment rate below 5%, and likely to remain that way or head lower over the next year, the Reserve Bank will maintain a strong tightening bias in its monetary policy.
“We expect a further 25 basis points increase in the RBA cash rate over the next three months in response to tightening labour market conditions and rising inflation pressures,” it says.
A private gauge of inflation rose 0.2% in May, resulting in an annual inflation rate of 3.3%, which is above the 2-3% target band sought by the Reserve Bank.
However, the result comes after a 0.3% increase in April, suggesting the rate of inflation may be easing, although pressures still remain.
The TD Securities-Melbourne Institute pointed to a 0.2% rise in May. Fruit and vegetables recorded the biggest price rise, up by 3%, rent increased by 1.5% and fuel prices rose by 0.5%.
Balancing the price increases were decreases for travel and accommodation, alcohol and tobacco, and appliances.
While the trimmed mean measure of underlying inflation was flat, with the annual pace at 2.4%, TD Securities says more rate rises are on the way.
“The signal from our inflation gauge is that the trough in annual inflation is clearly in the rear-view mirror,” TD Securities said in a statement.
“We remain of the view that inflation pressures are set to accelerate into 2012, with the terms of trade continuing to rise and ongoing lack of spare capacity in the labour market.”