Job ads trending up moderately
ANZ released its job advertisement series this morning which recorded a ninth consecutive monthly gain of 0.9 percent in seasonally adjusted terms to a total of 143,484 ads (up from 130,680 a year ago).
The continued growth in February was driven by a few more job ads on t'internet (+0.7 percent month-on-month) and newspaper job ads (+8.1 percent month-on-month).
The Aussie economy remains mired in limbo-land.
As the above chart shows job ads are trending up and this series has a reasonably good correlation with official data.
ABS analysis reportedlyfound that the ANZ job ads series has a correlation coefficient of 0.75 with employment growth at a lead period of three quarters.
The problem is that while job creation is in positive territory, at least based on the history of this series employment trends are not presently strong enough to prevent the unemployment rate from moving higher.
More easing likely
For this reason ANZ Chief Economist Warren Hogan expects interest rates to be cut again to just 2 percent in April with a third cut a possibility later in the year. Mused Hogan:
"After commencing a fresh easing cycle in February, the decision by the RBA to keep policy on hold last week is somewhat perplexing.
This is particularly the case given the RBA has indicated that the transmission mechanism of monetary policy is muted at present, and that one 25bp cut in isolation will have limited economic impact.
We will be watching consumer confidence data in the next few days, as well as the official employment figures on Thursday, to determine the likelihood that the RBA will cut again next month as we expect.
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."
Implied yields on cash rates futures contracts are broadly in agreement on the case for a third cut, but will take some convincing on the timing of the 25bps cut expected by ANZ on April 7.