Unemployment to rise, rates to fall

The fall in job advertising was due to a 2.2 per cent fall in internet advertising, while newspaper advertising remained steady.

This is the first month newspaper advertising has not fallen since February. Further monitoring of trends in newspaper advertising is warranted over coming months as newspaper advertising tends to lead online advertising trends, notwithstanding the continuing structural change towards online advertising.

ANZ’s head of Australian economics and property research Ivan Colhoun said moderating job advertising points towards a further softening in employment growth in the months ahead and a modest rise in the unemployment rate.

“To date, the weakening trend for job advertising is more like the 1995-96 experience rather than the sharp slowdown during the global financial crisis in 2008-09 or even the more significant slowdown experienced in 2000-01. During 1995-96 the unemployment rate rose 0.4 per cent between June 1995 and December 1996, while in 2000-01, unemployment rose around one percentage point,” Mr Colhoun said.

“ANZ forecasts the unemployment rate to rise to 5.5 per cent by mid-2012. This forecast is consistent with modest employment growth of less than 6,000 jobs per month. In line with a rising unemployment rate, wages and underlying inflation pressures are likely to moderate.

"Accordingly, there is scope for the RBA to reduce interest rates a little as insurance against weaker than expected growth outcomes and even higher unemployment.

“We expect the first of two 25 basis point cuts are likely to be enacted at the next board meeting in November.”