Jobs ads slide, ASX set to relax rules for small caps to raise cash, Inflation falling, Shares gain: Economy roundup

The number of job advertisements dropped 7.5% in April, bringing the current number of job ads to just half of what it was 12 months ago.

The ANZ Job Advertisements Series reveals newspaper job ads dropped 3.1% in April to just 8203 per week on average, as internet job ads fell by 8.1% to just 128,567 per week on average.

Newspaper ads are down 58.9% from April 2008, with internet ads down 49.2% from a year ago. ANZ head of Australian economics, Warren Hogan, said in a statement that the figures are consistent with rising unemployment over the coming year.

“Total job ads have fallen in each of the past 12 months and are now half the level they were in April 2008. This suggests that total employment in Australia will contract over the year ahead,” Hogan says.

“Most of the 1.7 percentage point increase in the unemployment rate thus far has been due to labour force growth and rising participation, rather than falling employment. However, the ongoing weakness in job ads suggests that falling employment levels will be the key driver of rising unemployment over the year ahead.”

Hogan says ANZ now expects unemployment to peak at about 8.25% during 2010.

New ASX proposal for small companies to raise capital

Meanwhile, the Australian Securities Exchange is now proposing new rules to assist small listed companies raise fresh capital in the sharemarket. Under the proposed move, small and medium sized companies would have 12 months to raise extra capital after getting shareholder approval for a previous capital raising. The current limit is three months.

“We suggest a 12 months maximum that companies can have in their back pocket, so that when they don’t need to go back to the market they don’t need to spend six weeks or so convening a meeting of shareholders to approve something which shareholders could have approved much earlier,” ASX general manager of regulatory and public policy Malcolm Starr to The Australian Financial Review.

Inflation falling

Inflation has now fallen to a four-year low on the back of weakening demand and falling rents, the TD Securities-Melbourne Institute monthly inflation gauge has revealed.

While the monthly inflation gauge remained unchanged during April following a 0.1% fall in March, annual inflation has dropped to 2.1% in April from 2.6% in March – the lowest point since May 2005.

“The recession is crushing pricing power to the point where the overall level of consumer prices has recorded a net change of just 0.3% over the past seven months,” Annette Beacher, senior strategist at TD Securities, said in a statement.

“On economic grounds, there is nothing standing in the way of the RBA board cutting interest rates at its meeting tomorrow.”

Shares higher

The Australian sharemarket has opened higher today on the back of positive results from Wall Street last week and rises in the mining sector. The benchmark S&P/ASX200 index was up 80.6 points or 2.1% to 3850.2 at 12.20 AEST.

The Australian dollar has also opened higher at above US73 cents.

Commonwealth Bank shares have gained 2.7% to $35.99 while NAB has lifted 3% to $21.38. ANZ shares have gained 2.7% to $16.37 as Wesfarmers rose 4.8% to $23.80.

Macquarie Group shares have dropped up to 9.7% after the bank raised $540 million in capital, just two months after it denied the bank would undertake such a venture.

The investment bank reported lower-than-expected full-year profit levels of just $871 million last week, down 52%.

Overseas, the troubled Bank of America is now working on a plan to raise more than $US10 billion in new capital in an attempt to convince the Obama Administration it does not need more support.

The bank has already received $US45 billion in Government aid and is undergoing a “stress test”, along with 19 other major lenders, to determine if the institutions are viable.

The announcement could be a reaction to the preliminary results of the tests, which were released to the banks last week. The official results will be announced on Thursday.