Thursday, February 21, 2013

Jobs. Wages. That rate cut just got closer

The odds of a March interest rate cut have shortened following news of an astonishingly sharp decline in job advertisements.

The employment department’s monthly survey finds the trend in online job advertising has sunk to its lowest point since it began the survey in 2006.

Only 168,300 jobs were advertised online in January, down from 219,000 a year earlier. Queensland has experienced the biggest crash, followed by South Australia and Western Australia.

Job advertising is sliding in 36 of the 37 regions identified by the department. Only the NSW Blue Mountains is holding out against the trend.

Advertisements for jobs in the Newcastle and Hunter regions are down 40 per cent over the year, advertisements for jobs in the Southern Highlands are down 25 per cent and advertisements for jobs on the Central Coast down 22 per cent. Sydney job advertisements are down 13 per cent.

Nationally the strongest slides were in advertisements for technicians and trades workers (down 27 per cent) and machinery operators (down 26 per cent). In none of the eight groups identified by the department did job advertisements increase.

The Reserve Bank is cautious about accepting news about job advertising at face value because it believes employers are moving away from online advertisements to other means of hiring including networking sites such as LinkedIn and personal recommendations...

Separately wage estimates released Wednesday show growth has eased from an annual rate of 3.7 per cent to 3.4 per cent, well below the 4 to 4.5 per cent range that causes the Reserve Bank concern.

“Wage inflation has finally moderated,” said Westpac economist Justin Smirk. “The pressure from the mining boom is more modest than expected and there’s very little pressure in consumer-oriented industries.”

Wednesday futures trading lifted the implied probability of a March rate cut from 26 to 29 per cent.

A further rate cut would take the Reserve Bank’s cash rate to just 2.75 per cent, the lowest since records have been kept.

The Bank will decide after seeing the Bureau of Statistics capital investment survey due next Thursday. A survey showing mining investment slowing with little to replace it would add to the case for a cut.

Related Posts

. January. Employment shrinking - it's the worst since the GFC

. January. Bad omen - job vacancies dwindling, public vacancies evaporating

. Reserve Watch: Why it's on standby to cut again

6345.0 Vacancy Report