Jobs ads pick up in September

CHRIS ZAPPONE
October 5, 2009 - 1:33PM

Update Job advertisements clocked up back-to-back monthly gains in September, providing yet more reason for the Reserve Bank to raise interest rates as demand in the economy picks up.

The total number of jobs advertised increased 4.4 per cent in September up from a 4.1 per cent gain in August, according to the ANZ Bank's monthly survey. August's increase was the first gain in 16 months.

"These data provide the best evidence we have received to date that the labour market - and the economy more generally - are entering an early recovery phase following this downturn," said ANZ acting chief economist Warren Hogan.

Newspaper jobs rose by 3.7 per cent, while internet jobs increased by 4.5 per cent, ANZ said.

The Reserve Bank board meets tomorrow to decide on the key interest rates, with investors now rating as an even-money bet that the central bank will hike rates to 3.25 per cent from its five-decade low of 3 per cent.

The Australian dollar strengthened after the release of the job ads figures. It was recently buying 87.2 US cents, up about a quarter of a US cent.

''It shows the second improvement in two months - that's welcome. But what we do know is that these figures are still substantially below their levels 12 months ago,'' Treasurer Wayne Swan said.

''What this indicates is that there are substantial challenges on our hands."

Ads remain about 45 per cent lower than for the same month last year.

Hours cut

The ANZ's Mr Hogan said fewer hours worked lessened employment cuts during the downturn

"Once the recovery commences, this process is likely to slowly reverse, with working hours for existing employees creeping up again before total employment numbers begin to grow."

The total number of hours worked fell by 4 million in August, to 1.507 billion hours, seasonally adjusted, squeezing the incomes of Australian households, while the unemployment rate held steady at 5.8 per cent.

Mr Hogan said it may take "some time to see sustained net job growth again, even after indicators such as job ads turn up."

"In the near term, we expect to see further deterioration in the labour market, due to the very low level of demand for new labour, continuing job shedding and continuing strong growth in labour supply," Mr Hogan said.

ANZ expects the unemployment rate to rise to 6.1 per cent when fresh data is released on Thursday, and to peak at around 7.25 per cent in the middle of next year.

With signs of an eventual recovery becoming clearer, analysts say the RBA will feel comfortable looking past rising joblessness in setting the cash rate.

In its September meeting minutes, the RBA said it would eventually have to raise rates from 3 per cent.

The RBA was "conscious of the need to balance the task of controlling inflation over the medium term with that of supporting economic recovery." The RBA will announce its rate decision tomorrow at 2.30pm.

The Olivier Job Index, released over the weekend echoed the findings of the ANZ job ads. It climbed 3.6 per cent in September, extended its advance to two months in a row.

SEEK job ads, another gauge, rose 2.8 per cent, seasonally adjusted, in the same month, marking the third month of gains.

czappone@fairfax.com.au