Australian job ads fell in July, but ANZ thinks the weakness may not last

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Australian job advertisements fell modestly in July, indicating that subdued labour market conditions earlier this year will likely persist in the months ahead.

According to monthly ANZ job advertisements survey, total advertisements fell by 0.8% to 157,278 after seasonal adjustments, seeing the annual percentage growth rate slow to 6.9% from 8.0% in June.

Both internet and newspaper advertisements fell.

Internet postings — now accounting for the bulk of total advertisements — slipped by 0.7% to 155,491, leaving the year-on-year growth rate at 7.9%.

Newspaper advertisements continued to collapse, slumping by 12.6% to just 1,787, leaving the annual decline at a whopping 41.7%.

On current trend, it appears to be only a matter of when, not if, newspaper job advertisements will disappear forever.

Source: ANZ

Commenting on the July result, Felicity Emmett, head of Australian economics at ANZ, suggested that uncertainty generated from Australia’s federal election and UK Brexit referendum may have contributed to the drop in employee demand.

“Given that ads fell sharply in early July, we think this decline may partly reflect the impact of increased uncertainty following the close federal election on 2 July and the shock decision by the UK to leave the European Union on 24 June,” she wrote in a research note released on Monday.

However, given that concern over both outcomes appears to have dissipated as soon as it arrived, Emmett believes that the slowdown in advertisements could reverse in the months ahead.

“This impact appears to have been short-lived, with job ads picking up over the course of July,” she wrote, suggesting that there’s been “little sustained effect from the increase in uncertainty on business and consumer confidence”.

“With surveyed business conditions remaining upbeat and the RBA cutting rates in August, we look for a gradual improvement in hiring intentions over the remainder of the year.”

After a period of strength in the second half of 2015, Australian labour market conditions have cooled this year with hiring levels slowing sharply, leaving the unemployment rate oscillating around 5.75%.

Part time employment has made up the bulk of recent jobs growth, leading to elevated levels of underemployment which, in turn, is leading to slowing wage growth.

The Australian Bureau of Statistics will release Australia’s June quarter wage price index on Wednesday next week. That will be followed a day later by Australia’s July jobs report.

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