Jobs outlook worsens as mining states suffer

The outlook for the jobs market worsened in September with a key gauge of future hiring intentions slumping for the sixth consecutive month, exposing weakness in the mining states of Western Australia and Queensland.

The ANZ Job ads index fell 2.8 per cent in September, accelerating a 2.3 per cent fall in August, putting the level of job ads 10.8 per cent below a year ago.

"Total advertisements have fallen for the past six months, and in more recent times this decline has been seen across all states," said ANZ head of Australian Economics and Property Research Ivan Colhoun.

Newspaper job advertisements fell 10 per cent in September in Western Australia, and 5.3 per cent in Queensland. In South Australia they fell 2.2 per cent. Newspaper ads fell 3.6 per cent in September, while internet ads fell 2.7 per cent in the month, ANZ said.

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In New South Wales newspaper ads fell 5.9 per cent, while in Victoria they rose 0.6 per cent in September, while in Tasmania they rose 5 per cent.

Newspaper ads, although in structural decline, are used in conjunction with the broader online ads index to gain a picture of the states' relative demand, ANZ said.

"Consistent with some recent project delays and cancellations in the mining sector, along with falls in the prices of Australia's key commodity exports, newspaper job advertisements in the mining states of Western Australia and Queensland declined in September," Mr Colhoun said.

Companies cutting jobs

In recent months, a string of companies have announced mass lay-offs and project cancellations, including petroleum refiner Caltex which chopped up to 630 jobs in Sydney, iron ore miner Fortescue cut 1000 jobs as a result of the slowdown in demand for the commodity. BHP Billiton and Xstrata Coal cut a combined 900 jobs last month.

The cuts are occurring as prices for commodities important to Australia fall and the outlook for demand from Asia becomes less clear.

Australia's jobless rate of 5.1 per cent in August is expected to rise to 5.3 per cent in September, when the data is released on Thursday. Although the headline unemployment figure has never breached 6 per cent since the financial crisis hit, analysts speculate that the strong number masks pockets of underlying weakness.

The Reserve Bank, in cutting the official rate to 3.25 per cent this month, flagged a weaker jobs market to come despite the strength in the official ABS figures.

"Labour market data have shown moderate employment growth and the rate of unemployment has thus far remained low," governor Glenn Stevens said in the statement accompanying the rate cut decision. "The bank's assessment, though, is that the labour market has generally softened somewhat in recent months."

ANZ had earlier overstated the strength in the job ads index, saying it had received inaccurate data from a smaller provider of internet-based advertising in May. It later issued a correction of past data in June.

Mr Colhoun said the weakness in the mining states in September, along with the general slowdown in the labour markets, rather than a rise in the official unemployment rate, likely "hastened the RBA's decision to cut" the official cash rate to 3.25 per cent from 3.5 per cent last week.

The RBA reduced the cash rate amid signs that Australia's mining investment boom was slowing, while the pace of growth in China was also slowing.

Source: http://www.businessday.com.au/business/jobs-outlook-worsens-as-mining-states-suffer-20121008-278bk.html

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