Job ads post big rise

Chance of RBA rate cut in March now virtually nil say analysts

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 March 4, 2013 3:02 pm AEDT

Companies may be starting to respond to lower RBA interest rates, with news out today that job ads jumped by 3% in February – the biggest gain since May 2010.

ANZ Bank's monthly job advertisements index rose 3% in February, its second month in a row, with internet ads climbing 3.3%, while newspaper ads slid 2.9%. ANZ economist Ivan Colhoun said that it was unclear if rising job ads was a temporary development or evidence of a sustained trend.

Seek Limited (ASX: SEK), Australia's leading job advertising company reported in February that it had seen a 2.5% increase in new job ads between December 2012 and January, the first time in 12 months that Seek has reported an increase.

"The uplift in job ads in January shows a confidence from employers to act on hiring candidates to backfill current vacancies or expand their operations," Seek managing director Joe Powell said in a statement at the time.

A rise in job advertisement numbers suggests falling unemployment. Economists have previously predicted Australia's unemployment level would rise this year, but they may have to review their forecasts after the latest data. Job ads also rose 0.6% in January and Mr Colhoun said the employment market was showing definite signs of improvement.

According to the ANZ survey, the Northern Territory has the strongest jobs market in Australia at the moment, with large gas projects hiring hundreds of workers, with the biggest increases in Queensland and then New South Wales. Victoria recorded the biggest fall in job ads in February.

While newspaper job advertising is still falling, the ANZ said that the rates of decline had been moderating in recent months – good news for newspaper publishers Fairfax Media (ASX: FXJ), APN News and Media (ASX: APN) and News Corporation (ASX: NWS). With an estimated lowly 4% of the job ad market, newspapers don't have that much left to lose, with 96% of jobs published online.

Foolish takeaway

According to analysts, the positive job ads data means the chance of a rate cut by the RBA tomorrow has been virtually killed off. With rising property prices and a strong equity market, they may be right.

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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, 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. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in Fairfax and Seek.

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