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18th of July 2018

Economy



Job advertisements: Going in reverse

ANZ Job Ads fell 1.6% in June (seasonally adjusted), and was down 1.2% over the quarter (3mma). The economy has been decelerating for a while, and now job ads growth has stalled and is starting to move in the wrong direction.

Annual growth moderated to 2.9% y/y from 3.9% (3mma).

ANZ Senior Economist Liz Kendall said, "Recent deterioration in business expectations of activity and hiring intentions appear to be flowing through into job ads. Higher wage costs, uncertainty about labour relations policy, and wariness about the future may be working in combination to dissuade businesses from expanding their workforce.

"Today’s data point to the unemployment rate cruising along at its current level, but not drifting lower. Flat-lining in both job ads and the unemployment rate are consistent with our expectations, but downside risks have increased that could see the labour market go backwards from here.

"After a strong run this cycle, we expect the economy will grow at reasonable rates. But more engines of growth would be needed to drive the unemployment rate lower. The economy is close to full employment, which in combination with policy changes is supportive of a pick-up in wage inflation. That said, the outlook is uncertain and without intensification in resource pressures, underlying wage inflation may remain subdued. We expect that cost pressures (in part, a result of higher wages) will see firms increase their prices. But a key question is how businesses respond in light of current uncertainty.

"Today’s data show that business caution is affecting decision making, with flow-on effects for the labour market. And with businesses caution persisting, it is fair to say that downside risks have increased."

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