Jobs ads plunge, Interest rate cut unlikely: Economy roundup

Any hopes of avoiding rising unemployment over the year ahead have been dashed, with the ANZ Job Advertisements Series showing job ads fell by 6.7% in June, bringing the annual fall to 51.4%.

The figures show that while job ads in metropolitan newspapers increased by 0.9% in June to an average of 8,192 per week, internet job ads fell by 7.2% to an average of 119,154 per week – 51.5% lower than 12 months earlier.

ANZ Head of Australian Economics Warren Hogan said in a statement that the results were “disappointing”, and they indicate “hiring intentions by Australian business are still weak”.

“Thus far however, this retrenchment in new labour demand has not shown up as a significant fall in the level of employment in the economy. Business may not be hiring but so far it appears that labour shedding has been quite subdued in comparison to previous economic downturns. Indeed, labour hoarding appears to be lasting longer in this economic downturn than in the past.”

“ANZ expects employment to fall by 32,000 in June and the unemployment rate to rise to 5.9% when the ABS releases the Labour Force report on Thursday. Just about all leading indicators of employment, including business surveys and the ANZ Job Ads series point to declining employment levels over the second half of the year.”

Inflation under control, but rate cut unlikely

Meanwhile, the TD Securities-Melbourne Institute monthly inflation gauge rose 0.4% in June, negating a 0.3% fall the previous month.

Annual inflation slowed to 1.4% from 1.5% in May and from 4.8% a year ago, the lowest annual pace since August 2002.

“The RBA Board meeting tomorrow will no doubt discuss the case for an immediate interest rate cut,” Annette Beacher, a senior strategist at TD Securities told Reuters.

“The RBA is placing a lot of faith in the momentum in China to drag Australia out of recession and this may see the RBA, yet again, defer the rate cut decision to the following month.”

The price increases were due to rising costs for private motoring, insurance services and fruit and vegetables, along with the price of fuel.

Shares slip

Meanwhile, the share market has opened lower today due to flat leads from European markets, after Wall Street was closed last Friday due to the 4 July Independence Day holiday.

The benchmark S&P/ASX200 index was down 56.7 points or 1.48% to 3771.5 at 12.00 AEST. The Australian dollar also slipped back to US79c.

Commonwealth Bank shares slipped back 0.7% to $36.94, with ANZ also dropping 0.7% to $16.03. Westpac fell 0.4% to $19.24, with NAB the only major bank rising by 0.2% to $21.89.

David Jones says consumers becoming more confident

David Jones chief executive Mark McInnes has said the next year will be difficult for retailers, but that confidence is returning. The comments come after David Jones upgraded its expectations for the 2008-09 financial year.

McInnes said the Government’s financial stimulus packages are helping restore confidence in the market, along with the resumption of regular trading in the equities market.

“Once those two things happened, in combination by the way, it was kind of this sense of relief and a sigh across the market of `wow, maybe that is as bad as it (the recession) gets and people started spending again’,” McInnes told Sky News’ Sunday Business program.

Leighton wins new contract

Leighton Holdings has won a contract worth US$230 million to build a new information technology park in India.

“The project, worth approximately US$230 million, involves the construction of over 570,000m² of built up area comprising a mixture of IT offices, a convention centre, retail, residential, hospitality, entertainment and car park facilities,” Leighton said in a statement to the ASX.

“We are currently undertaking a range of large-scale infrastructure, building and offshore oil and gas projects throughout the country, and expect to consolidate our position as the leading international contractor in India by securing a number of other major projects this year.”

In the US, troubled automaker Chrysler Group has completed its board of directors with five new members, after escaping from bankruptcy last month.

“The formal creation of our Board of Directors is another important step toward building a viable Chrysler Group for the long term,” C. Robert Kidder, acting chairman of the board, said in a statement. The new board will have its first meeting on 29 July.