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Job advertisements falling

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Job advertisements have fallen for the fourth month in a row, suggesting that unemployment will rise in the coming months and adding to the case for lower interest rates.

Total job advertisements on the internet and in major metro newspapers fell by 0.7 per cent in October, the ANZ job advertisements survey showed on Monday.

This was the fourth consecutive monthly fall for the series and its sixth decline in seven months.

In the year to October, job ads were up 1.8 per cent.

ANZ Head of Australian Economics and Property Research Ivan Colhoun said the data suggested a gradual rise in the unemployment rate over the coming months.

This may make cuts to the cash rate by the Reserve Bank of Australia (RBA) more likely, Mr Colhoun said.

“In line with a rising unemployment rate, wages and underlying inflation pressures are likely to have begun moderating,” he said.

“As such, ANZ believes there is continued scope to ease interest rates towards a `neutral’ stance from the `more neutral’ stance at present.”

The RBA decided to reduce the cash rate by 25 basis points to 4.5 per cent on Tuesday last week, citing softening labour market conditions and easing inflationary pressures.

ANZ expects the central bank to cut the cash rate by a further 25 basis points in February 2012.

The Australian Bureau of Statistics (ABS) is due to release official labour force figures for October on Thursday.

The median market forecast is for 10,000 jobs to be added in the month and for the unemployment rate to rise to 5.3 per cent, from 5.2 per cent in the previous month.

ANZ expects the unemployment rate to rise to 5.5 per cent by mid-2012, Mr Colhoun said.

“However, with the mining investment boom building through 2012 and with the subsequent flow on effects on the Australian economy, ANZ does not foresee a more substantial increase in the unemployment rate.”

Many economists believe the risk of accelerating inflation rises as unemployment drops below five per cent.

Newspaper job ads were 2.7 per cent lower in October, while internet job advertising decreased by 0.6 per cent in the month.

Newspaper advertising is now 16.7 per cent lower than a year ago, while internet advertising is 2.8 per cent higher over the same period, in part reflecting the continuing trend towards advertising online, ANZ said.