That said, the recent strength in job advertisement numbers is not broadly-based.  Similar to May, in June the rise in job advertisements was driven entirely by a 3% rise in internet advertising.  In contrast, newspaper job advertisements fell 1.6%.  This was driven by falls in all states and territories except for Victoria and Tasmania.  This is the second consecutive monthly decline in newspaper job advertisements.

Given that newspaper advertising is more expensive than internet advertising, we have observed that at turning points, newspaper advertising tends to move before the internet.

Hence, while the overall outlook still appears bright, the fall in newspaper job advertising in May and June does suggest that some businesses are adopting a more cautious stance.  This is not unexpected given increasing concerns over the global backdrop.  The recent decline in Australian business confidence and subdued activity in interest-rate sensitive, labour-intensive sectors of the economy, such as retailing, may also be constraining demand for new labour.

Despite the strong rise in total job advertising, the slowdown in newspaper job advertising growth does imply some impending moderation in Australia’s recent strong employment growth.

The ABS’ June Labour Force report, due Thursday 8 July, is therefore likely to show some easing in the rate of new job creation, consistent with the trend in the ANZ job ads series.  We are expecting jobs growth of around 15,000 this month. With the participation rate sitting at 65.1%, this would see the unemployment rate hold at 5.2% for the second-successive month.

We expect employment growth to ease from its recent strong pace over the coming months before rebounding in the latter part of 2010 and into 2011.  A substantial private investment pipeline, an expected upturn in residential building construction and a solid outlook for the broader Australian economy, as national income receives a sizeable boost from the sharply higher terms of trade, should support ongoing jobs growth. This should see the unemployment rate gradually ease through the course of 2010, and it may dip below 5% by the end of the year.

With heightened uncertainty over the global outlook and the Australian economy in the midst of a potentially bumpy transition from public to private sector led growth, we expect the RBA Board to sit on the sidelines in coming months.  Today’s mixed result for the ANZ Job Advertisements series adds to the case for the RBA to keep policy rates unchanged for now.  Nevertheless, ongoing solid employment growth, given Australia’s already relatively low unemployment rate, would create significant upside risks to the RBA’s already relatively high inflation forecasts.  Provided the global environment does not significantly deteriorate, we therefore expect the RBA will recommence tightening monetary policy in the latter part of the year and raise the cash rate to 5% by December 2010.

• Job advertisements rose strongly again in June after a similarly strong rise in May.  This suggests that employers remain confident about Australia’s economic prospects, despite escalating concerns about the global environment.
• That said, the recent strength in job advertisement numbers is not broadly-based.  Similar to May, in June the rise in job advertisements was driven entirely by a 3% rise in internet advertising.  In contrast, newspaper job advertisements fell 1.6%.  This was driven by falls in all states and territories except for Victoria and Tasmania.  This is the second consecutive monthly decline in newspaper job advertisements.
• Given that newspaper advertising is more expensive than internet advertising, we have observed that at turning points, newspaper advertising tends to move before the internet.
• Hence, while the overall outlook still appears bright, the fall in newspaper job advertising in May and June does suggest that some businesses are adopting a more cautious stance.  This is not unexpected given increasing concerns over the global backdrop.  The recent decline in Australian business confidence and subdued activity in interest-rate sensitive, labour-intensive sectors of the economy, such as retailing, may also be constraining demand for new labour.
• Despite the strong rise in total job advertising, the slowdown in newspaper job advertising growth does imply some impending moderation in Australia’s recent strong employment growth.
• The ABS’ June Labour Force report, due Thursday 8 July, is therefore likely to show some easing in the rate of new job creation, consistent with the trend in the ANZ job ads series.  We are expecting jobs growth of around 15,000 this month. With the participation rate sitting at 65.1%, this would see the unemployment rate hold at 5.2% for the second-successive month.
• We expect employment growth to ease from its recent strong pace over the coming months before rebounding in the latter part of 2010 and into 2011.  A substantial private investment pipeline, an expected upturn in residential building construction and a solid outlook for the broader Australian economy, as national income receives a sizeable boost from the sharply higher terms of trade, should support ongoing jobs growth. This should see the unemployment rate gradually ease through the course of 2010, and it may dip below 5% by the end of the year.
• With heightened uncertainty over the global outlook and the Australian economy in the midst of a potentially bumpy transition from public to private sector led growth, we expect the RBA Board to sit on the sidelines in coming months.  Today’s mixed result for the ANZ Job Advertisements series adds to the case for the RBA to keep policy rates unchanged for now.  Nevertheless, ongoing solid employment growth, given Australia’s already relatively low unemployment rate, would create significant upside risks to the RBA’s already relatively high inflation forecasts.  Provided the global environment does not significantly deteriorate, we therefore expect the RBA will recommence tightening monetary policy in the latter part of the year and raise the cash rate to 5% by December 2010.