Australian job advertisements fell back in February, adding to signs that the breakneck hiring spree seen in the second half of 2015 may cool in the month ahead.
According to the ANZ, job advertisements fell by 1.2% to 154,748 after seasonal adjustments, leaving the number at the lowest level seen since October last year.
Despite the mild decline registered in February, advertisements still grew 8.2% from 12 months earlier.
Internet job postings fell by 1.3% to 151,850, overriding a 6.9% jump in newspaper advertisements to 2,898. Reflective of the switch away from newspaper to online postings, internet job ads rose by 8.7% from a year earlier, overriding a 10.7% decline in newspaper advertisements.
According to Warren Hogan, chief economist at the ANZ, while growth is clearly decelerating, recent financial market volatility and tricky seasonality patterns in February may have been factors behind the monthly decline.
“Growth in job advertising has slowed sharply in recent months,” says Hogan. “The fall in job ads in February may reflect some caution on behalf of businesses amid heightened financial markets volatility and negative news flow on the global economy. It could also partly reflect the tricky nature of seasonal adjustment at this time of year.”
Even with the one-off factors that may have contributed to the unusually large decline, Hogan believes that after ramping up in 2015, hiring may cool in the year ahead, keeping the unemployment rate elevated.
“Even if we discount some of the decline in February, there has still been a slowing in trend growth in job advertising over the past six months. This loss of momentum has also been evident more recently in business surveys, including at the global level,” says Hogan.
“While the economy finished 2015 on a relatively strong note, as shown in last week’s better-than-expected GDP figures, 2016 is already shaping up as one of conflicting forces. The global growth outlook remains very uncertain and confidence is fragile, but the US economy looks pretty solid. Domestically, ongoing sharp falls in mining investment are likely to be coupled with less robust property market conditions and a waning boost from the falling currency. In contrast, fiscal restraint is easing and monetary policy remains very accommodative.”
As a result of the forecast slowdown, Hogan believes Australian unemployment is likely to remain around 5.75% to 6% “for much of 2016”.
On Thursday this week the ABS will release its February labour force survey. While there are well-documented concerns with the validity of the ABS’ seasonally adjusted figures, job growth has slowed sharply over the past two months, casting some doubt on whether the pace of hiring late last year will be sustained.
ANZ’s survey indicates that job growth may well cool, with implications for household confidence, spending and as a consequence economic growth should it eventuate.