Last month I noted that the increase in newspaper ads in December should be viewed with caution. That turned out to be on the money as newspaper ads fell -25.2% in February, wiping out all the gains in January and then some and are now down -55.4% from a year ago.
Internet ads which make up for 95% of all job ads fell -9.4% in February and are now -38.6% lower than they were a year ago. The combined total of ads from both internet and newspapers fell -10.4% in February, the biggest single monthly drop since the combined series began in 1999. Also the year over year decline of -39.8% is also the largest since the series began.
ANZ's Head of Australian Economics, Warren Hogan, had this to say:
The trends in job advertising in Australia suggest a substantial rise in the unemployment rate is likely. We have revised up our unemployment rate forecasts. We now expect the unemployment rate to reach 6½% by the end of 2009 and 7½% by mid 2010. These job advertisement numbers, based on historical relationships, suggests the risks to our forecasts are for higher unemployment.....
...Our assessment is that the latest job ad results are consistent with employment contracting at a 2% annualised pace over the second half of 2009. This in turn suggests that the current downturn in the economy is likely to last throughout 2009, with little prospect of a meaningful recovery before 2010. Recent trends in job advertising are consistent with other indicators which suggest that the Australian economy entered recession in late 2008 and remains in recession in early 2009.
Well fancy that, a mainstream economist is now playing catch-up with a deteriorating economic picture. Welcome to the recession camp Warren, you may be late but you won't be the last. Note that Hogan say risks to his unemployment forecasts are to the upside. I concur.
Also out today, NAB's monthly survey of business conditions which fell to -20, a reading not seen since 1992. NAB Chief Economist Alan Oster had this to say, from The Australian:
"There is little in the survey to suggest that activity levels might be bottoming with continuing falls in mining and manufacturing activity very prominent,"
"Nor is there much solace to be found in the employment, forward order and capex data in the survey."
The bank has lifted it forecast for the nation's jobless and now sees it at 6.5 per cent by the end of 2009 and 7.5 per cent in 2010
The NAB survey showed the employment index fell by 10 index points to minus 27 points in February, the largest fall in the survey's history to level last touched in December 1991.....
...."Our forecasts imply a moderate recession in 2009 - it would no longer be appropriate to classify these forecasts as a mild recession," he said.
NAB expects the Reserve Bank to cut the cash rate to 2 per cent by late 2009, from 3.25 per cent currently.
Seems Allan Oster and Warren Hogan are now smoking from the same hookah pipe (click the link if you don't know what a hookah pipe is). Yes I know, what use are economists in telling you what you already knew 3 months ago ? None, charlatans the lot of em.
The thing to note is that their forecasts continue to get worse, just 3 months ago, most thought we could scrape through and avoid a recession. a month ago it was maybe a mild recession and now its a moderate recession. Give them a few more months and it will be a severe recession with unemployment forecasts over 8% in 2010. But since you know that already, it won't be a surprise when the media excitedly announce it.