March was another bad month for job ads in major newspapers and the internet as the former boom states of Queensland and Western Australia continue to bleed job ads.
On Sunday the Oliver Index told us that online job ads dropped more than 12% last month, after a 9% fall in February. This morning the ANZ said its job ads series tumbled to a new low last month.
Whether this sort of information will be enough to get the Reserve Bank to cut rates at tomorrow’s board meeting in Brisbane is uncertain. Market economists are split, with online surveys all divided between no cut and a cut of either 0.25% or 0.50%.
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But conditions have worsened in the economy since the bank sat on its hands in March. This morning ANZ said job ads in March fell 8.5% from the previous month to an average of 147,804 a week: that was after February’s record fall of 10.4%.
That took the fall over the year to March for newspaper and online ads to 44.6%, down from the 40% drop in the 12 months to February.
ANZ Head of Australian Economics Warren Hogan said in a statement: “The former boom states of Queensland and Western Australia are experiencing the most extreme contraction in job advertising. Australia’s two-speed economy is fast disappearing but unfortunately the convergence of state economies appears to be happening via economic weakness.”
Newspaper ads in Queensland have dived 71% since November 2007 and in WA, the fall is 67%. That’s bad news for News Ltd and its Courier Mail monopoly and its community papers, and in Perth it’s tough for West Australian newspapers and its newish major shareholder, the Seven Network.
Newspaper advertisements fell 6.6% to an average of 7,958 per week, after falling 25.2% in February. Internet ads fell 8.6% to 139,846.
Mr Hogan said the ANZ now expected unemployment “to exceed 8% next year,” after the economy contracts by 1% in calendar 2009.
So, for yet another month the ANZ jobs report sends a strong signal that unemployment is on the way up, and yet the collapse in job ads in the past year has been far greater than the rise in jobless people and the rise in the unemployment rate.
Our unemployment rate is out Thursday and will show more job losses — up to 20 to 25,000 — and a jobless rate of perhaps 5.4% in March.
Some sources are more pessimistic. The Roy Morgan group said last week that its latest “unemployment estimate for March shows a drop in Australia’s unemployed, down 1.0% to 7.0%. Lower unemployment in March is not unexpected — it happens most years as students return to study — but it is still a ‘positive’ for the Rudd Government.”
Friday night saw the March jobs figures released in the US and it was tough news.
The US unemployment rate in March leapt to a new 25-year high of 8.5% as employers shed another 663,000 jobs.
All this is very gloomy, but there was a small spark of good news this morning. The monthly TD Securities-Melbourne Institute inflation gauge showed a fall last month. The survey showed a fall of 0.1% in March, following a 0.7% rise in February as petrol prices eased.
“The RBA will take comfort from the dip in prices in March and as a result it is likely to resume the interest rate cutting cycle when it meets tomorrow,” said TD Securities global strategist Stephen Koukoulas in a statement.
Mr Koukoulas expects a 0.50% rate cut tomorrow, putting him among the optimists, along with Macquarie Bank strategist, Rory Robertson.
He said this morning: “The prospects appear to be very good for a 50bp cut in the RBA’s cash rate to 2.75%, at 2.30 pm tomorrow. As before, the case for a 50bp cut remains strong: in particular, the economy has surprised the RBA significantly on the downside since it began marketing its current “pause” in February, with the downturn it forecast morphing into a recession.”