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UPDATE 1-Australia job ads jump in a promising omen for hiring
March 3, 2014 / 2:20 AM / 3 years ago

UPDATE 1-Australia job ads jump in a promising omen for hiring

4 Min Read

* Job ads jump most in over four years, housing stays strong

* Underpins expectations RBA to hold rates steady on Tuesday

* GDP data due Wednesday expected to show economy grew 2.6 pct (Adds detail, housing data, analyst comment)

By Wayne Cole

SYDNEY, March 3 (Reuters) - Australian job advertisements in newspapers and on the Internet jumped by the most in over four years in February, a rare piece of goods news on employment that presages a pick-up in hiring after months of weakness.

A survey by the Australia and New Zealand Banking Group out on Monday showed job advertisements rose 5.1 percent in February, from January, with all the gains coming in internet ads.

"The job ads data, inasmuch as they encapsulate broad labour demand, deserve the most attention, and corroborate the range of other indicators which have suggested modest improvement in the labour market," said Michael Turner, a strategist at RBC Capital Markets.

The jump in ads contrasts markedly with recent announcement of planned job losses at some high profile companies and an increase in the official unemployment rate to a decade peak of 6 percent in January.

It will also be a comfort to the Reserve Bank of Australia (RBA) ahead of its March policy meeting on Tuesday.

The central bank is considered almost certain to hold rates at a record low of 2.5 percent, where they have been since a cut last August. Last month the bank closed the door on further easing saying evidence of a strength in housing and consumption argued for a period of steady policy.

A Reuters poll of 19 economists found all expected a steady outcome, but were more divided on the direction of the next move with five tipping a cut and 13 looking for a hike.

Housing Wealth

Other data out on Monday tended to support the RBA's optimism on the economy.

Home prices across Australia's major cities steadied in February after a run of strong gains. Figures from property consultant RPData-Rismark showed overall dwelling prices were up 9.5 percent compared to February last year, led by 14.1 percent growth in Sydney.

The Housing Industry Association reported sales of new homes rose 0.5 percent in January, putting them up 17 percent on the same month last year.

The strength of home prices has boosted household wealth and underpinned firmer spending in recent months, while also laying the foundation for a revival in home building. The latter is urgently needed to help offset a slowdown in once red-hot mining investment.

Business investment fell sharply last quarter and likely took a chunk out of economic growth. Figures for gross domestic product (GDP) are due out on Wednesday which is expected to show the economy expanded by 0.7 percent in the fourth quarter of last year, compared to the previous quarter.

Growth for the year is seen picking up to 2.6 percent, from 2.3 percent, thanks chiefly to strength in exports as past spending on mines boosts production.

Data out on Monday showed businesses overall reported better sales and profits for the fourth quarter, though there were wide differences between sectors. While gross profits at manufacturers slipped, mining, construction and wholesale trade all made more money.

They were also paying more with the total bill for wages and salaries rising a healthy 1.1 percent in the fourth quarter, boosting household incomes.

Diana Mousina, an economist at Commonwealth Bank of Australia, noted annual profit growth was the highest since late 2010 and will lift nominal, or current price, GDP.

"Nominal outcomes are important because we all live in the nominal economy," said Mousina. "It is our experience with the prices we pay and the wages we earn. Businesses will benefit from rising revenues because it encourages labour hiring and capital expenditure." (Reporting by Wayne Cole; Editing by Eric Meijer)

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