Sharp Decline in Australian Job Ads

Australian job advertisements plunged in February. The fall of 10.4% was the largest monthly decline since the combined internet and newspaper series commenced in 1999. The annual rate of decline, at 40%, is also the worst outcome on record. ANZ Head of Australian Economics Warren Hogan suggested that new labour demand continues to contract across Australia in the early part of 2009.

He also said that the trends in job advertising in Australia suggest a substantial rise in the unemployment rate is likely. ANZ has revised up its unemployment rate forecasts and is now expecting 6½% by the end of 2009 and 7½% by mid 2010. These job advertisement numbers, based on historical relationships, suggests the risks to ANZ forecasts are for higher unemployment.

The newspaper series, which has a consistent data history back to the mid 1970s, fell 25.2% in February. To some extent this is an unwinding of the stronger numbers in January, when newspaper ads increased 12%. But newspaper advertising is down 27% over the summer and 44% since the collapse of Lehman Brothers. Newspaper job ads are now down 55.4% over the year, the largest rate of decline since the series began in the mid 1970s.

The fall in newspaper job advertisements in February was broad-based across the states and territories. The largest declines in percentage terms were in the Northern Territory (-34%), Western Australia (-30%), the ACT (-27%), Queensland (-26%) and New South Wales (-25%), followed closely by South Australia (-22%), Tasmania (-19%) and Victoria (-18%).

Internet advertising is also falling, down 9.4% in February following a 7.3% decline in January. The rate of decline in internet advertising has intensified over the past four months having fallen 30% since October.

ANZ’s assessment is that the latest job ad results are consistent with employment contracting at a 2% annualised pace over the second half of 2009. This in turn suggests that the current downturn in the economy is likely to last throughout 2009, with little prospect of a meaningful recovery before 2010. Recent trends in job advertising are consistent with other indicators which suggest that the Australian economy entered recession in late 2008 and remains in recession in early 2009.