For the ninth consecutive month, job advertisements in Australia have risen.
According to the latest data compiled by Australia and New Zealand and Banking Group (ASX: ANZ), job advertisements throughout the country continued to rise in February, creeping 0.9% higher.
Newspaper ads saw a healthy increase, climbing 8.1% month-over-month, whilst internet job ads increased 0.7%.
And although today's data appears promising on first glance, ANZ Chief Economist Warren Hogan said, "The annual pace of growth has eased somewhat in the previous two months, suggesting some loss of momentum."
"In addition, growth in new labour demand appears to be occurring in tandem with job losses in certain sectors such as manufacturing and mining," he said. "As such, aggregate employment outcomes continue to fall short of population growth, with the unemployment rate edging up. We expect this process to continue through much of this year, in line with sub-trend economic growth outcomes."
Currently the unemployment rate is at a 12-year high of 6.4%, with many expecting it to increase as a result of the decrease in the resources sector spending and investment.
ANZ says the outlook for economic growth coupled with a further rise in unemployment suggests the Reserve Bank of Australia will need to continue lowering interest rates to spur on growth.
Following on from what Mr Hogan described as a, "somewhat perplexing" decision by the RBA to hold interest rates at 2.25% in February – he said he'll continue to monitor further economic data releases in coming weeks to determine if the RBA will cut rates next month.
However, interestingly, Mr Hogan added, "there is also some possibility that a third cut will become appropriate later in the year, should confidence and indicators of non-mining investment and household consumption fail to turn up sufficiently." That could mean interest rates of just 1.75% by the end of this year!
Here's how you should react…
Despite growth in job ads this month, if – as forecast – the mining boom continues to fade for a numbers of years, we'll likely see higher unemployment rates and lower interest rates stick around for longer than many people envisage.
When poor consumer and business confidence combines with record low interest rates, it's certainly not good news for Australia's biggest banks – such as Commonwealth Bank of Australia (ASX: CBA), ANZ, Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB). Retailers, who are characteristically fickle, are also likely to witness their profits falling.
Investors should take note.
Although the juicy dividends of bank stocks might look tempting, if unemployment continues to rise and credit growth slows, they stand to lose out, big time.
