Job ads fall: Signs of a recession?

After 21 years of positive growth, could we see a recession in 2013?

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published January 14, 2013 12:46 pm AEDT

Job ads have fallen for the tenth-straight month, according to an ANZ monthly survey, suggesting 2013 could be a tough year for Australian businesses.

"Job advertising is a key barometer of economic activity and business confidence", said ANZ economists.

Job ads fell by 3.8% in December 2012, following a 2.8% drop in November, and job advertisements are now 20% below their February 2012 levels, and close to 50% below pre-financial crisis levels.

According to ANZ head of economics, Justin Fabo, the unemployment rate is expected to rise to 5.75% from its current level of 5.2%, in the second half of 2013, and the ongoing weakness in job ads suggests that conditions for a large number of Australian businesses remain challenging and the outlook uncertain.

We've seen several sectors of the Australian economy struggle, with retailing, media, and construction sectors all suffering. Boral Limited (ASX: BLD) chief Ross Batstone said last year that conditions in the building and construction sector were the worst he had seen in 20 years, while Fairfax Media (ASX: FXJ) have suggested that they don't expect any pickup in advertising until at least 2015. We've also seen David Jones Limited (ASX: DJS), Harvey Norman Holdings (ASX: HVN) and a host of other retailers reporting falling sales and consumers intent on keeping a tight grip on their spending.

With mining investment forecast to drop in the ensuing years, we could also see the resources sector in the same boat as those mentioned above.

The Australian Bureau of Statistics is due to release official unemployment figures for December this Thursday.

The Foolish bottom line

Of course we also have record low interest rates, low government debt, unemployment still at extraordinary levels – despite the tips it will rise this year, and an economy the envy of the rest of the world. After 21 years without a recession, 2013 may be "the year we had to have" – to use Paul Keating's words.

If you only invest in one company this year, make it our "Top Stock for 2012-13." Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report.

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Motley Fool writer/analyst Mike King owns shares in David Jones and Fairfax. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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