The Reserve Bank will appreciate the news that the Australian labour market is stabilising.
Judging by the ANZ Jobs Ads survey for July, this steadying is very real, although it’s happening at very low levels.
But it’s happening nevertheless.
It’s also welcome because the ANZ Bank now sees unemployment topping out at 7.5% next year, not above 8%.
And that means the days has been brought closer when interest rates will rise, not today, but sometime next year, probably in the first quarter.
The odds of it happening have firmed and the surge in offshore markets, the dollar and commodities overnight has added to the rate rise impetus.
Wall Street, Asian and European markets hit new highs for the year, the S&P 500 climbed over 1,000 points, oil topped $US73 a barrel in London, copper hit a 10 month high, as did the Aussie dollar.
While suffering its 15th monthly fall, the 1.7% drop in newspaper and online job ads in the latest ANZ survey was the lowest this year and a discernible slowing can be seen.
It’s the 5th month in a row that this slowing trend has been seen.
The survey showed that the number of jobs advertised in major metropolitan newspapers and on the internet fell by 1.7% in July to a weekly average of 125,207 per week.
"This follows a fall of 6.7% in June. The total number of job advertisements in July was 51.9% lower than 12 months earlier," the ANZ reported.
The news came as the latest survey of manufacturing activity showed another contraction, but for the third month in a row it was a smaller one than in the previous month.
The Performance of Manufacturing Index ‘rushed’ 6.1 points high to 44.5, its highest level for 10 months and further evidence that the sector is on the improve, despite the recent exaggerated union claims that manufacturing would suffer more job losses and pain.
Similar improvements were reported in China and other economies in July.
Taken together, along with the continuing strength in building approvals and solid housing credit growth in recent months, the figures will help the Reserve Bank board meeting keep interest rates steady at today’s meeting.
The Federal government’s stimulus spending, very low interest rates (thanks to the RBA), low oil and petrol prices and reasonably strong exports seem to have cushioned Australia from following the US, Japan and other major economies to the depths of a serious recession.
But they could very easily help convince the board to soften its bias towards a rate easing and reveal a more neutral or pro-tightening line, as suggested by Macquarie Bank strategist Rory Robertson yesterday.
"The RBA Board tomorrow will leave its cash rate unchanged at 3% for the fourth-straight month. Policy probably will remain on-hold well into 2010, unless full-time employment starts trending up noticeably in the meantime," he wrote.
"The main change in the RBA’s policy statement presumably will be the advertised shift to a weak tightening bias, dropping the easing focus that featured in both the July policy statement".
The RBA releases its latest quarterly Statement on Monetary Policy on Friday which will contain updated forecasts for growth and inflation.
Both will give us more of a clue as to where the central bank sees rates and the economy in 2010.
For second month, newspaper job ads did better than the online world, according to the ANZ survey.
"The number of job advertisements in major metropolitan newspapers decreased by 0.4% in July to an average of 8,162 per week.
"This follows a 0.9% rise in June. Newspaper advertisements are now 48.4% lower than in July 2008. In trend terms, the number of newspaper job advertisements fell by 1.2% in July to be 51.4% lower than a year ago.
"Newspaper job advertisements were mixed across the states in July. New South Wales (14.8%) experienced the largest fall in percentage terms, followed by the ACT (5.4%), the Northern Territory (3.3%), South Australia (2.1%) and Western Australia (0.9%). Meanwhile there were rises in Tasmania (19.9%), Victoria (15.4%) and Queensland (4.6%).
"The number of internet job advertisements fell by 1.8% to average 117,046 per week, and were 52.1% lower than 12 months earlier. In trend terms, internet job advertisements fell by 3.6% in July to be 52.7% lower than in July 2008," the ANZ reported.
Mr Hogan said the "Data provides further evidence that demand for labour in the Australian economy is still wallowing at recessionary levels.
"So far, the difference between the current downturn and a recession however has been that weak demand for labour has not translated into widespread labour shedding, with most employers choosing to cut back on staff working hours rather than reducing overall headcount.
"Indeed, the main driver of increasing unemployment has been rapid growth in the labour force due to strong population growth and high levels of participation.
"Somewhat encouragingly however, the trend pace of decline in job ads has eased for the past five months, a tentative sign that job ads may soon stabilise and that businesses may stop cutting back on hiring intentions.
"This will unfortunately be insufficient to prevent job shedding in the near term, with employment expected to contract moderately through the remainder of 2009.
"ANZ expects employment to fall by 18,000 in July and the un
