Newspaper job ads fell 13.9 percent in December following a 12.0 percent fall previously, continuing their rapid downtrend for the 14th consecutive month, observe the analysts at Westpac. Trend growth rates for newspaper ads were -7.6 percent/month and -44.0 percent/yr. Internet job ads fell 9.5 percent after an 8.4 percent fall previously, leaving their trend negative for the ninth consecutive month at -4.9 percent/month and -21.7 percent/yr. The net result was a 9.7 percent fall in total job ads after an 8.6 percent fall previously, their eighth consecutive drop.
With job ads a flow variable, but employment a stock, it makes more sense to look at trends in the level of job ads as a predictor of future jobs growth. To abstract from the increased usage of internet advertising in recent years, we compare the level of total job ads to their longer run trend (expressed as a percent deviation from trend) as a seven-month lead of annual employment growth. On this basis, the current picture is a percent deviation from trend in total job ads of -13.3 percent, still comparable with the low seen in the 00/01 slowdown of -22.6 percent, a low in the 96/97 slowdown of -13.1 percent, but more resilient than the low of the 90/91 recession of -52.5 percent.
However, trends can be rapidly revised as new data is added to the series. Our final chart shows a projected scenario for the job ads trend deviation if headline job ads consolidate at their December level in the months ahead. That would see the trend deviation widen towards -20 percent, again, similar to the last two slowdowns, but at this stage far more resilient than the 90/91 recession. Overall, for now we retain our view for a more rapid labor market deterioration through 2009 slowing jobs growth towards zero percent/yr at end 2009, lifting the unemployment rate towards 6 percent by end 2009, a far more resilient outlook than seen in the last recession, but further (likely) deteriorations in job ads near term will see the risks to our view skewed to the downside.
For comments and feedback: editorial@rttnews.com