Job ads fall but unemployment fears subsiding, Manufacturing sector fights back: Economy Roundup

The number of job advertisements has once again taken a dive in July, falling by 1.7%, with an annual fall now reaching 51.9%, according to the latest ANZ Job Advertisements data.

The new figures show newspaper advertisements fell by 0.4% during July, with the number of internet ads falling by 1.8%. But ANZ said the figure show “signs of stabilisation”.

The total number of job advertisements fell to a weekly average of 125,207, 51.9% lower than the same time 12 months ago. Newspaper advertisements fell by 0.4% to a weekly average of 8,162, with internet job ads falling by 1.8% to an average of 117,046 per week – 52% lower than the same time last year.

ANZ head of Australian economics Warren Hogan said in a statement that the data shows demand for work is still in “recessionary levels”.

“So far, the difference between the current downturn and a recession however, has been that weak demand for labour has not translated into widespread labour shedding, with most employers choosing to cut back on staff working hours rather than reducing overall headcount.”

“Indeed, the main driver of increasing unemployment has been rapid growth in the labour force due to strong population growth and high levels of participation.”

Hogan also said ANZ expects the unemployment rate to rise to 6.1% when the official Labour Force data is released on Thursday, but said that “we are increasingly optimistic that the pace of decline in employment will not be as severe as envisaged six months ago”.

“We now expect the Australian unemployment rate to peak at around 7.5% in mid 2010.”

Manufacturing activity reaches 10-month high, shares open flat

Some more good news for the economy has emerged today, with a measure of manufacturing activity reaching a 10-month high in July due to increases in orders and production.

The Australian Industry Group/PriceWaterhouseCoopers Performance of Manufacturing Index lifted 6.1 points to 44.5 in July from June, the highest level since September – but still below the 50-point level separating growth from contraction.

“The easing in the rate of decline in manufacturing activity is encouraging,” AIG chief executive Heather Ridout said in a statement.

“It is clear that the manufacturing performance in Australia has been deeply influenced by fiscal and monetary stimulus and inventory rundowns. Looking beyond the monthly figures, the big question is whether these improvements will be sustained once these stimulatory forces have abated.”

The Australian share market has opened flat this morning after similar performances in the US and European markets last week, despite the encouraging manufacturing data.

The benchmark S&P/ASX200 index was up 16.6 points or 0.39% to 4260.6 at 12.10 AEST. The Australian dollar has recorded better results, lifting to a 10-month high of US83c.

NAB shares rose 2.5% to $24.95, with Commonwealth Bank shares also increasing 1.8% to $43.55. ANZ shares lifted 2.5% to $18.99 while Westpac also increased 1.7% to $22.05.

CanWest awarded extension for debt repayment plan

Ten Network’s majority shareholder CanWest Global Communications has managed to secure another extension from its lenders while it finalises a recapitalisation plan. The company must now come up with a plan to repay its $5 billion debt by 14 August.

Meanwhile, new figures from the Reserve Bank of Australia show total credit provided to the private sector by financial entities jumped by 0.1% during June after a 0.1% decline in May.

Housing credit increased by 0.6% in June, after a 0.5% increase in May, with housing credit rising by 7.1% over the year to June. Other personal credit, however, fell by 0.3% during June after a 0.4% decline during May.

Business credit dropped by 0.5% during June, after a 0.8% decline during May, with the RBA saying that “most of the decline in business credit has been due to falls in foreign currency denominated lending. These falls reflect both the appreciation of the Australian dollar over this period and some reduction in the stock of foreign currency denominated lending.”