Economy: Job Ads At Three Year High, NAB Sees Economy Drifting Higher

The ANZ says internet and newspaper job ads at a three year high, but the National Australia Bank sees business confidence and conditions grinding "higher but with little jobs growth".

In its latest monthly survey the National Australia Bank said forward indicators improved "marginally" in March, but the economy remains patchy.

But the ANZ jobs report for last month was the most upbeat there has been for six months, but growth in the month was the slowest for three months.

The ANZ said job ads internet and in major metropolitan newspapers rose 1.0% last month, compared with the 3.3% rise in February and January's 7.5% surge.

Job advertising has increased 12% over the first three months of 2012, much faster than the growth in the employment data and a sign that hiring intentions by businesses continue to brighten.

As a result, job ads were up 2.8% in the year to March and are now at their highest level since November 2008.

ANZ chief economist Warren Hogan said the job ads figures showed that unemployment should not rise too far in the coming months.

"The trend in total advertising points toward a modest recovery in employment growth and an unemployment rate remaining below 5.5 per cent through 2012, despite potential divergences between regions and industries," Mr Hogan said in a statement yesterday.

The Australian Bureau of Statistics will release March employment data tomorrow and the ANZ is forecasting jobs growth of 5,000 and an unemployment rate of 5.3%.

(The AMP sees a 10,000 fall and a jobless rate of 5.3%).

With the Reserve Bank of Australia now on inflation watch ahead of a possible rate cut at its May board meeting, the ANZ's Mr Hogan said "more rate cuts beyond May are unlikely as employment growth improves.

"We expect a trend improvement in job ads and labour market conditions over the next couple years," he said.

"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."

Internet job advertisements were up 1.0% in March and were 4.1% higher than a year ago.

Job ads in newspapers fell 0.6% in March and have slumped 22.0% in the past year.

Metro newspapers are now all but irrelevant and account for just 4% or so of the total national job ads market.

Meanwhile the NAB sees a less certain tone in the economy in its March survey.

Business conditions improved in March - up 1 point to +4 index points. "Conditions have improved (slightly) in each month of 2012 to date and appear consistent with an economy that is starting to gain momentum - albeit marginally.

"Business conditions remain a touch above the long-run average (of +1 for the full history of the survey).

"The strengthening in conditions in the month largely reflected a tick up in profitability and employment conditions, while trading conditions were unchanged.

"However, conditions reflect high trading rather than employment.

"Overall, while conditions point to an economy embarking upon a modest recovery, they remain divergent across industries and states.

"Furthermore, despite generally improving in March, forward indicators remain fairly lacklustre suggesting that activity will continue to be soft, at least in the near term."

Business confidence "ticked up in March, lifting 2 points to +3 index points, partly unwinding the step down in sentiment recorded in the previous month."

"Confidence remains susceptible to gyrations 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, as well as recent positive economic data out of the US.

"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.

"Overall, the index remains a little below the series long-run average (of +6 since 1989)."

And, like the ABZ, the NAB sees a rate cut next month, and then no more for 2012.

"(The) RBA is signalling a rate cut in May provided inflation is low. We have not changed our rate views and with our Q1 core CPI forecast of around ½% - we expect a rate cut. We then expect the RBA to be on hold through 2012," the bank said in its March business survey.

"(The) Australian near-term outlook revised down marginally, consistent with a continuing sluggish survey, a deteriorating housing sector (a concern that needs to be watched) and surprisingly weak export performance in early 2012.

"While we expect the latter to be temporary (Chinese New Year, weather, coal strikes) and there is hope that the economy may be marginally gathering momentum, the reality is that the current soft patch will see a slight deterioration in near-term unemployment prospects - we now expect a peak of around 5½% mid-year before declining back to around 5% by end 2013.

"This month's Survey suggests economic momentum is fundamentally going sideways - but may just be starting to edge up.

"Forward indicators of demand, however, remain lacklustre.

"Credit demand fell back to low levels in March, following a pick up in February (consistent with official RBA data).

"Conditions improved sharply in mining and finance/ business/ property in March, but deteriorated reasonably heavily in wholesale and recreation & 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.

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

"Labour costs growth was broadly unchanged in March, while purchase costs and product prices growth both eased to fairly subdued levels.

"Retail prices weakened and appear to have fallen slightly in Q1," the NAB said.

The Westpac/Melbourne Institute March survey of consumer sentiment will be released later today.