Business confidence rises in March but with little jobs growth

Businesses appeared slightly more confident in March than in February, according to the latest NAB survey, but a degree of caution appears to be inhibiting hiring and investment decisions.

NAB’s Monthly Business Survey for March shows business confidence rose from one point to three index points, partly unwinding the setback in sentiment recorded in the previous month.

But according to NAB, confidence remains susceptible to changes in global markets.

“The positive boost to sentiment in March appears to have partly stemmed from optimism about the recent moves to stabilise the Greek debt situation,” the NAB report stated.

“However, this may have been partly offset by intensifying concerns of a more pronounced slowing in the emerging economies.

“Furthermore, the recent depreciation of the Australian dollar may have provided a small amount of relief for trade-based industries.”

Encouragingly, business conditions also continued to edge up in March, up one point to four index points. To date, conditions have improved in each month of 2012.

“Business conditions remain a touch above the long-run average (of +1 for the full history of the survey)… However, conditions reflect high trading rather than employment,” the NAB report said.

Rising confidence is also reflected in the results of ANZ’s Job Advertising Series for March, which shows the number of job advertisements on the internet and in newspapers rose 1% month on month.

This follows solid rises in January and February. According to ANZ, total job advertisements were 2.8% higher than in March 2011 and are now at the highest level since November 2008.

The rise in job advertising was driven by a 1% rise in internet job advertisements, which were 4.1% higher than a year ago.

“Job advertising has increased 12% over the first three months of 2012 in a sign that hiring intentions by firms are continuing to improve,” ANZ chief economist Warren Hogan says.

“The trend in total advertising points toward a modest recovery in employment growth and an unemployment rate remaining below 5.5% through 2012.”

ANZ expects a trend improvement in job advertisements and labour market conditions over the next few years.

“Increased volatility in other activity indicators from the rising importance of mining may spill over into job ads at times, but we remain optimistic on hiring intentions as a result of the mining boom,” Hogan says.

According to NAB, conditions improved sharply in mining and finance/business/property in March, but deteriorated quite heavily in wholesale, and recreation and personal services.

“While mining conditions continued to outperform all other industries, the modest pickup in conditions in February and March appears to have been more broadly based,” NAB said.

“Conditions strengthened sharply in WA for a second consecutive month, while Queensland was the only state to report weaker conditions.”