Momentum continues to grow in the Australian economy with the ANZ Job advertisements series, a leading employment and economic activity indicator, rising for a fourth consecutive month in April. Growth signs were particularly encouraging in Australia’s biggest three states New South Wales, Victoria and Queensland.
Job ads are now 1.5 per cent higher than a year ago, in stark contrast to the year on year declines over the last three years and nearly 20 per cent recorded in the middle of last year.
“It’s a good result,” said ANZ chief economist for Australia, Ivan Colhoun. “While the pace of improvement in job ads suggests that labour market conditions have only improved moderately at this stage – and therefore do not suggest a rapid turnaround in the unemployment rate - the pick-up in hiring intentions suggests employment growth will continue to improve modestly in the near term and the unemployment rate should peak around 6% or slightly below.”
Of particular note was that newspaper job ads fell sharply in April, a period which included Easter and Anzac day which historically depletes newspaper job ads.
However Colhoun cautioned the looming Federal Budget and “the prospect of a larger-than-expected fiscal contraction” pose risks to the outlook.
“More specifically, the mooted introduction of a temporary deficit reduction levy will impact consumption both directly and indirectly,” he said.
“The direct hit to incomes from the tax as is currently suggested will likely trim growth and consumer spending a little this year (around 0.25 per cent of GDP).”
Consumer confidence has also taken a hit in line with mooted budget austerity measures.
“The coverage of the leaked policies in the media to date appears to have already weighed on consumer confidence, with ANZ–Roy Morgan consumer confidence declining by 4.4 per cent in the week ending 27 April,” Colhoun said.
“While the budget will provide necessary clarity on these issues, ANZ’s view is that the combined impact of these factors is likely to keep the recovery in the economy moderate and interest rates unchanged this year.”
The next ANZ-Roy Morgan Consumer Confidence survey will be released on May 6 ahead of the budget.
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