While it is unlikely that the Reserve Bank will cut interest rates when the Board meets later today, ANZ’s Ivan Colhoun believes soft job data could encourage the RBA to relax the current monetary policy setting within the next few months.
According to the latest ANZ Job Advertisement Series, the number of job advertisements on the internet and in newspapers fell 2.3 per cent in August after falling 0.8 per cent in July.
This was the fifth consecutive monthly fall, something that last occurred in the second half of 2011, when consumer and business confidence was significantly affected by uncertainty with European economic and financial developments.
Advertisements are now 9.6 per cent below year-ago levels.
Speaking about the results, ANZ’s head of Australian economics and property research Mr Colhoun said the slight declining trend for job advertising, together with a pick-up in job losses due to restructuring and businesses’ productivity initiatives, is likely to be consistent with a slight further trend rise in the unemployment rate over coming months.
“The trend in employment and unemployment over coming months will be extremely important in the Reserve Bank’s future deliberations on monetary policy,” Mr Colhoun said.
“While the Bank appears happy currently to assess the impact of recent interest rate reductions on the economy, we expect that later in the year, slower than desirable employment growth and a continuing upward drift in the unemployment rate will allow modest further monetary policy accommodation – a trend which appears likely to continue in the early months of 2013 as well.
“Weaker commodity prices, in conjunction with a still high Australian dollar, if persistent, and the trend in deferrals of a number of resource projects, reinforce this expectation.”