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Category Archives: Economic recovery

From: AAP January 11, 2010 11:40AM

THE number of jobs advertised in major newspapers and online rose by 6 per cent in December, the strongest monthly growth in two-and-a-half years.

Overall job ads averaged 149,063 a week, with newspaper job ads rising by 11.6 per cent and internet job ads increasing by 5.6 per cent, an ANZ survey shows.

The rise in December follows a 5.2 per cent increase the month before and it was the strongest monthly growth since May 2007.

ANZ acting chief economist Warren Hogan said total job advertisements have recovered from the recent low in July 2009 as they continue to improve each month.

“This is already translating into employment growth and helping to keep the unemployment rate relatively stable, despite accelerating population and labour force growth,” Mr Hogan said.

“This sustained improvement in job advertisements and actual employment has come relatively early in this economic recovery cycle, indicating the mildness of the downturn Australia has experienced over the past 18 months.”

The report comes ahead of labour force figures for December from the Australian Bureau of Statistics on Thursday.

Financial markets expect the number of new jobs created increased by 10,000 in December, and the unemployment rate rose 0.1 percentage points in December.

The number of jobs advertised in major metropolitan newspapers averaged 10,631 a week, and were 4.8 per cent higher than 12 months ago, the ANZ survey says.

Online job ads averaged 138,432 a week, but they were 24.1 per cent lower than in December 2008.

Mr Hogan forecasts the job market to continue to improve in the coming months.

“In the near term, the forward indicators appear positive for some solid employment growth in December and over the summer months, although probably at a slower pace than seen in the past three months,” Mr Hogan said.

“The ANZ (and other) job ads surveys are improving rapidly, retail sales turnover grew strongly in November (retail trade is currently Australia’s second largest employing sector, behind health services), business investment and construction are regrouping, and the AiGs three industry surveys (manufacturing, services and construction) all indicated net expansion of employment in December.”

ANZ expects the unemployment rate to peak at around six per cent by mid-2010.

From: AAP January 10, 2010 4:41AM

Car production in Australia has plunged to its lowest level since 1957.

CAR production in Australia has plunged to its lowest level since 1957, with manufacturers hit by the global economic slump and the high Australian dollar.

Despite strong local car sales, helped by the federal government’s business tax breaks, exports to markets such as the Middle East and the United States have all but collapsed, Fairfax newspapers say.

The industry is set to be further buffeted by a January 1 tariff cut that has lowered the price of imported models relative to locally produced cars.

Figures from the Federal Chamber of Automotive Industries show Australia produced just 225,713 vehicles last year, almost 100,000 fewer than in 2008 and 55 per cent of the output in 2004.

The chamber’s chief executive, Andrew McKellar, told Fairfax a “crucial factor” this year will be the speed of recovery in export markets, warning that the high dollar poses a serious long-term threat to the competitiveness of the industry.

Separate figures from the Bureau of Statistics confirmed the dramatic collapse in exports.

The export slump will leave Australia’s car industry even more heavily dependent on taxpayer-funded assistance, which is mainly provided through the Government’s $6.2 billion car industry plan.

Industry Minister Kim Carr said production had been running at half its usual pace, although local producers had fared better than elsewhere in the world, given no major companies had gone broke.

Ross Gittins
July 13, 2009

Another week, another round of not-so-terrible indicators about the state of the economy. It’s getting easier to believe and harder to doubt this recession will be a lot milder than we’re used to.

If the recession does prove to be less severe than advertised, both sides of politics will need to review their plans.

Last week brought the remarkable news that the Westpac-Melbourne Institute index of consumer sentiment rose by 23 per cent over the past two months to its highest level since December 2007, with optimists now well outnumbering pessimists.

The number of new housing loans in May was at a 16-month high. And the labour force figures for June showed unemployment continuing to rise quite slowly.

Put that together with recent increases in retail sales, car sales and home prices and you’ve got a picture of an economy travelling quite a bit more strongly than envisaged as recently as the budget in May. The global recession is every bit as severe as we were led to expect, but it seems it hasn’t dragged our economy down nearly as much we feared.

Whereas in early May the Reserve Bank was forecasting that real gross domestic product would contract by 1 per cent over calendar 2009, when we see its revised forecast next month it’s likely to be for growth of about 0.5 per cent, maybe more.

If our prospects really are that much brighter, two main factors account for it. First, continued demand from China has limited the expected decline in our export income. The volume of exports actually rose over the six months to March and seems to have held up since then.

Much rides on the success with which the Chinese authorities can switch from export-led to domestic-led growth, whether from consumption or infrastructure investment. The beauty from our perspective is that wherever they get their growth from, they’ll need lots of steel and energy – the very commodities we supply.

The second factor is the continued strength of consumption spending, explained not just by the cash splash and the huge cut in mortgage interest rates, but by the way this has affected people’s sentiment about the state of their own finances and the outlook for the economy.

It’s always possible, of course, that all we’re experiencing is an Indian summer. The global financial crisis may have more shocks to deliver, or it could be that consumer and business confidence will wilt under the inexorable rise in unemployment yet to come.

But that fear is starting to wear thin. Whereas the budget forecast was for the unemployment rate to reach a peak of 8.5 per cent sometime in 2010-11, the new expectation is that it may not quite reach 7.5 per cent, and will reach its peak a fair bit earlier.

If that expectation comes to pass then, with the rate now at 5.8 per cent, we’ve already come a little more than half the distance from the trough of 3.9 per cent in February last year.

If further evidence confirms the emerging picture of a relatively mild recession, this has wide ramifications.

For a start, it reduces the likelihood of any further cuts in the official interest rate – barring any seriously damaging developments – and brings forward the day when the Reserve will want to start reeling in its monetary stimulus.

Something that’s starting to worry it is the untimely recovery in the housing market. Although it would be desirable to see house prices gently falling back from the excessive levels they have reached, nationwide they’ve actually risen by 4 per cent in four months. House prices are rising in all capital cities bar Perth, auction clearance rates are up to about 80 per cent in Melbourne and, nationwide, prices are rising at the bottom, the middle and the top of the range.

The thought that the lowest mortgage interest rates in 31 years might be starting a new house price bubble is one that central bankers find unsettling. Should these signs continue, it will make them anxious to start the process of getting rates back to more normal levels.

Australia’s interest rates are already high in comparison with those in the major economies. This, combined with our brighter prospects relative to the others, probably explains why our dollar is back up to around (an uncomfortable) US 80c.

If our economy enters recovery while the majors continue to wallow, the gap between our rates and theirs will widen further, probably putting further upward pressure on the dollar. Another consequence of a milder-than forecast recession and earlier-than-expected return to growth is smaller budget deficits than forecast. Already it’s clear the deficit for the financial year just ended will fall short of the $32 billion expected at budget-time.

And if deficits prove smaller than expected, then government borrowing and debt levels will be lower than expected.

If so, this could prove embarrassing for Malcolm Turnbull, whose Debt Truck asserts that Labor’s “debt bombshell” is $315 billion.

Though Turnbull wants the punters to believe this is an accomplished fact, it’s actually what the gross federal public debt (naughty, naughty) was projected to be in five years time.

But if this recession does prove a lot milder than feared, this could also create political problems for Kevin Rudd. Because the punters never think of the “counter-factual” (what would have happened had you not done what you did), a mild recession could leave some people wondering – and an opportunist Opposition questioning – why you ever thought it necessary to spend all the money you did. Rudd’s reply, presumably, would be to claim it was only the Government’s actions that protected us from the global conflagration.

And there’s another downside Rudd needs to ponder. The earlier the economy begins recovering, the sooner the pressure will begin for him to start cutting spending to reel in the budgetary stimulus.

In theory, this shouldn’t be much of a problem: first, because what the budget’s “automatic stabilisers” caused they should eventually take away and, second, because all the discretionary additions to government spending officially labelled as “stimulus” are strictly temporary rather than ongoing.

In practice, however, with every month Rudd stays in office he’s solving this problem or that by making permanent additions to government spending. It’s facing up to the budgetary bottom-line implications of this largesse that will make his life uncomfortable.

It’s beginning to look as though the start of the process of reeling in the budgetary and monetary stimulus may coincide with the election due in the second half of next year.

For the Reserve to be raising rates in two election campaigns in a row at least would demonstrate its political even-handedness. But perhaps Rudd will read the signs better than his predecessors.

Ross Gittins is the Herald’s Economics Editor.

Chalpat Sonti
July 7, 2009 – 9:15AM

Spectacular gains by some of WA’s best and least well known companies have contributed to the value of the state’s publicly-listed companies surging $6.7 billion.

Research by Deloitte shows the value of WA’s top 100 ASX-listed companies rose 5.9 per cent in June, the fifth straight month of increases.

Those gains have meant the value of the companies has grown from a low of $72.4 billion, at the depth of the market in November last year, to $11.8.6 billion on June 30, representing a gain of 64 per cent.

Most of the gains for June were driven by the mining sector, Deloitte Perth managing director Keith Jones said.

There were substantial rises from Fortescue Metals Group (44.7 per cent), Red Fork Energy (76.2 per cent) and Mantra Resources (41.5 per cent).

While iron ore producer Fortescue is a household name, Red Fork and Mantra, a US-focused oil and gas explorer and African minerals explorer respectively, are not.

They rank 82nd and 36th respectively on the top 100 list, but their share prices have been buoyed by some promising announcements.

It was a mixed June for WA’s two largest public companies, Woodside and Wesfarmers. Woodside’s market capitalisation dropped $100 million, or 0.3 per cent, during the month while Wesfarmers’ value rose $1.3 billion, or 6.2 per cent.

Peter Martin Economics Correspondent
July 7, 2009

THE Reserve Bank board is likely to hold its nerve and keep interest rates steady despite new evidence pointing to a hiring freeze and jump in unemployment.

Newspaper and internet job advertisments slipped a further 6.7 per cent in June to roughly half its level of a year ago and the lowest level since the take-up of internet advertising, according to the ANZ employment survey.

For interest rate, stamp duty and home loan calculators, click here

Newspaper job advertisements in the Herald and the Daily Telegraph slipped 1.2 per cent in June to be down 48 per cent on a year before.

An ANZ economist, Warren Hogan, said that while employers had stopped hiring they were still “hoarding labour” and were yet to seriously shed staff.

“For the moment population growth is driving the unemployment rate up rather than widespread job losses,” he said. “The key to the future is whether … labour shedding picks up.”

Forecasters surveyed by Reuters expect a further 25,000 jobs to be lost when the official figures are released on Thursday, which combined with population growth would push up the unemployment rate from 5.7 per cent to 5.9 per cent. Most expect an unemployment rate of 7 per cent by December.

The Reserve Bank board is likely be unmoved by the outlook for Australian unemployment when it holds its monthly meeting in Sydney this morning, focusing instead on improving prospects for China, which is now Australia’s biggest export customer.

Since the bank’s governor, Glenn Stevens, declared China’s recovery to be “real” at a business function in May, Reserve Bank staff have firmed in their view that increased demand by China for Australian raw materials reflected an economic rebound rather than speculative stockpiling.

Australia’s exports to China have hit record highs in each of the past three months, eclipsing exports to Japan.

The Reserve Bank believes that while there might be an element of speculation to these purchases, they are primarily driven by real and probably sustainable demand flowing from the Chinese Government’s stimulus program.

The bank expects the International Monetary Fund to revise up its outlook for China when it reports tomorrow.

At home the Reserve Bank is buoyed by confidence surveys suggesting a return to optimism among businesses and consumers and by some of the results from its business liaison program.

A Treasury report finds conditions in the mining sector better than had been expected and Australia’s retail and construction sectors “buoyant”.

However it finds manufacturing conditions mixed, with “those operating in the food and beverage sector or supplying lower value retailers generally enjoying relatively benign conditions” and “those engaged in the production of consumer durables and business plant and equipment less sanguine”.

But it says even among heavy manufacturers “several contacts believed the bottom of the current economic cycle may have been reached”.

Financial markets expect the Reserve to keep rates on hold today for the third consecutive month, but expect at least one further cut by the end of the year.

By Stephen Johnson
July 02, 2009 06:33pm

Jobless given access to subsidised training
“Training for training’s sake is … cruel”
Billions ‘wasted’ on intervention

A PLAN to help up to 124,000 retrenched workers has united the states but drawn criticism in Canberra.

Prime Minister Kevin Rudd signed a deal with the states and territories to give intensive help to unemployed people aged over 25.

The Council of Australian Governments (COAG) conference in Darwin agreed to give the jobless access to government-subsidised vocational training.

Labor says the “compact with retrenched workers” will help up to 124,000 people.

“Workers who have been retrenched as a consequence of this global recession have lost their jobs through no fault of their own,” Mr Rudd said.

“Acting to support young Australians who are finding it hard to enter the labour market … represents an important intervention by government.”

Under the agreement, the Federal Government’s new employment agency Job Services Australia matches retrenched workers, aged over 25, with a path to a qualification.

The state and territories would set aside training places.

The training is for people who have been out of work since January 2009 and who are registered with a Job Services Australia provider.

The entitlement is available from now until the end of 2011.

Plan is “cruel”

Opposition employment participation spokesman Andrew Southcott said training programs for the unemployed had failed when Labor last took that approach in the mid-1990s.

“Training for training’s sake, without a job at the end of it, is cruel to the unemployed,” Mr Southcott said.

“The experience around the world is that a skills-first approach for the unemployed tends to be very expensive and you have poor outcomes.”

Queensland Premier Anna Bligh said COAG’s new scheme would prepare Australia for economic recovery.

“We know only too well how quickly this country can find itself in a situation of serious skills shortage.”

The plan follows an “earn or learn” COAG agreement reached in April to make youths aged 15 to 19 undertake training and guarantee places for 20-24 year-olds in skills development.

The Rudd Government says it has invested $300 million in programs to help retrenched workers, but it did not provide a cost for the latest one.

Daniel Flitton
July 3, 2009

Paul Keating has challenged a central tenet of Kevin Rudd’s multibillion-dollar, 20-year military blueprint, warning the Government has taken too defensive a stance in response to China’s rise in the Asia-Pacific region.

Returning to his “big picture” theme of Australia’s place in the world, the former Labor prime minister said last night the effects of the global financial crisis had matched the radical transformation of global affairs following the Cold War.

“I think we can safely say that the pendulum point of world economic activity has shifted and settled upon East Asia,” Mr Keating told a Perth audience.

The US – having in the past seven years gone from the world’s largest creditor country to largest debtor – was beset by uncertainty, he said – “Its financial mendicancy, its economic structure and its social and demographic problems.”

He said the US must turn away “from the mindless fizz of ever more consumption” and bring back to life manufacturing in American cities.

Mr Keating acknowledged the countries in East Asia confronted profound strategic problems – whether China’s one-party political system could maintain economic growth, for example, how Japan would cope with a rapidly ageing population and the prospect of unification on the Korean peninsula.

But China might eventually eclipse US power in the region and the major shifts in world power offered huge opportunities for Australia.

“With all that has happened and is happening, it will make absolutely no sense for us to think of our security in isolationist and defensive terms,” Mr Keating said. “The notion of Australia’s security being found outside Asia is as absurd now as it has always been . . .”

He said Australia’s international outlook must always remain outgoing and positive.

“For these reasons, I found myself at odds with some of the text of the Government’s 2009 defence white paper,” he said.

“Much of it is unexceptional . . . but it goes on to discuss what it describes as ‘the remote but plausible potential of confrontation’ between us and ‘a major power adversary’, not suggesting who that power might be.

“Obviously, it will not be the United States. You are then left to take your pick of China, Japan, India or Indonesia.”

Mr Keating said the tone of the paper was too ambivalent and failed to state clearly whether China’s military advance posed a threat to Australia or was a natural and legitimate aspiration for a rising economic power.

Released in May, the paper pledged a doubling of Australia’s submarine fleet from six to 12, extra warships, cruise missiles and advanced jets.

The paper took a swipe at Beijing for a lack of transparency in its own military build-up and warned that “shows of force by rising powers are likely to become more common as their military capabilities expand”.

Delivering the annual John Curtin Prime Ministerial Lecture, Mr Keating said Australia could not predict what sort of new order might spring up in the face of relative American decline.

“A region of this kind might turn out to be as peaceful and as prosperous for Australia as the one we have had since the end of the Vietnam War,” he said.

Accepting the need for defence readiness, he warned: “Too often, Australia has created problems for itself when its defence policy has gotten ahead of its foreign policy. Vietnam and Iraq are prime examples.”

He praised China’s huge economic leap forward in recent decades – “This great state, with its profound sense of self and the wherewithal to make a better life for its citizens, has eased itself into a major role” – a development, he said, that would be altogether positive for the region and the world at large.

“We do know China will be a power in its own right and a big player,” Mr Keating said.

Jacob Saulwick
June 11, 2009

THE average first-home loan in NSW has risen more than $50,000 in just over a year, climbing to $300,000 on the back of low interest rates and generous government grants.

The success of the boosted first-home owner grant in stimulating the market has drawn applause from the Government, but experts warned of the potential danger of a housing bubble as young couples take on loans they will struggle to maintain.

First-home buyers are taking out a record 28 per cent of the value of all home loans, Bureau of Statistics figures released yesterday showed.

But the surge in borrowing runs the risk of overinflating the lower end of the housing market. “We have just got to make sure that we don’t get a recovery on the back of over-extended young couples,” said Julian Disney, an affordable housing expert from the University of NSW.

The Reserve Bank Governor, Glenn Stevens, cited similar concerns last week, saying it would be counterproductive if low interest rates encouraged marginal borrowers to take on large debts. Yesterday’s release came alongside a rise in consumer confidence, attributed to the resilience of the economy amid global recession.

When the Government doubled the first-home owner grant in October as part of its response to the financial crisis, the average loan to new buyers was lower than that taken out by non-first-home buyers.

Since then, the average loan for first-home buyers across the country has increased $50,000 to $283,000 – about $25,000 more than loans to buyers who already have a foothold in the market.

For NSW home buyers, the average first mortgage is $299,000, against $276,000 for existing home owners. Before October, there had been little increase in the average first mortgage for about four years.

Asked if the the market had been inflated by grants, the Treasurer, Wayne Swan, said yesterday’s figures showed the benefits of the Government’s economic stimulus packages.

“It has played a very important role in supporting employment in the Australian housing and construction industry.”

Professor Disney, the director of the social justice project at the University of NSW, supported the supersized grant as an economic emergency measure. But he said the Government should consider winding back the original $7000 grant to prevent a new housing bubble.

“Every month the risk of inveigling people into a dangerous situation increases,” he said.

Loans to owner-occupiers increased for the seventh consecutive month in April, after falling in each of the eight months before the grant was doubled. Overall, the value of housing finance rose 0.9 per cent in April.

Banks have already responded to a crush of demand from first-home buyers by making it more difficult to get a loan. The big banks are only writing loans up to 90 per cent of the value of the property, and insisting on at least 5 per cent genuine savings for a deposit. Borrowers are complaining of waiting up to a month to get a loan approved from the big banks.

But Mark Haron, the principal at the mortgage broker aggregation group Connective, said the market had quietened in the past couple of weeks.

There remained plenty of enthusiasm among first-home buyers, Mr Haron said, but they were having to spend longer looking for houses because prices kept going up.

In October, the $14,000 grant for existing homes will fall to $10,500, before dropping to $7000 in January. The $21,000 grant for new properties will drop to $14,000 in October, and $7000 next year.

Bill Evans, the chief economist at Westpac, which published the consumer confidence index, called this month’s increase a “truly remarkable result”.

“It is the second largest recorded increase in the index since the survey began in 1974,” said Mr Evans, adding it was likely due to the small increase in economic growth figures released last week.

Unemployment figures released today are expected to show an increase in the jobless rate.

May 27, 2009 10:56am

BHP Billiton predicts the global economic recovery will be slow and protracted, but says there’s reason for some cautious optimism in China.

Chief executive Marius Kloppers told a minerals conference in Canberra that it would be another six months before there were clear signs of the true situation for the company’s markets in China and the OECD.

“The best we can say in the medium term is that conditions remain uncertain,” he said.

In the US, there was still a downside risk with unemployment remaining a problem. The economies of Europe, especially the UK and Germany, were still a worry, and Japan was weak.

On China, Mr Kloppers said there were a few reasons for optimism including early signs about growth, Chinese loan activity and in the construction and real estate sectors.

“If all of these trends continue in the second quarter they will give us some reason to be cautiously optimistic,” he said.

But Mr Kloppers stressed the need for caution because there were still issues around Chinese exports, adding the company did not expect in the medium term a sharp return to overall economic activity.

“We probably believe as a company the economic recovery will be both slow and protracted,” he said.,27753,25545415-31037,00.html

27 May 2009 8:17am

Employers that fail to treat staff with compassion and tact during the economic crisis will see their talent flee when the economy turns – and it will turn within 12 months, says Team Leaders managing director, James Adonis.

“How managers treat staff today will affect how managers are treated in a year’s time,” Adonis told HR Daily.

For the moment, the “power pendulum” has swung back in the bosses’ favour, he says, and disgruntled employees have far less leverage than they did throughout the employment boom.

But employers that fail to adequately support their workers in tougher times, or that resort to layoffs hastily and tactlessly, are likely to witness an exodus of their best when the employment market improves.

In his book, Employee Engagement: Why People Hate Working for You (ISBN 9780975798720) – based on a study of 2,400 employees from Australia and around the world – Adonis identifies 50 things that make workers angry, upset or frustrated on the job.

These range from poor performance management, hypocrisy and broken promises to backstabbing, office psychopaths and inconsiderate or annoying colleagues.

The disrespectful treatment of peers during an economic crisis – including those made redundant and those who remain – should also be added to the list, Adonis says.

Budgets might be tight, he says, but employers can still afford to:

support employees, who are also affected by the downturn and whose problems at home will impact their performance at work. Managers could arrange for them to receive financial advice;

encourage relationships within the workplace. Satisfaction levels increase by up to five times if there are healthy relationships among colleagues and leaders; and

provide opportunities, or implement career development programs. Even on a modest budget, workers can be encouraged to run a training session, take on a new task or assume greater responsibility. Giving them the skills to “help them leave” will actually keep them there longer, Adonis says.
10 things your employees hate
According to Adonis, managers should focus on what not to do, rather than what to do, and look to eliminate what employees hate.

The top 10 reasons employees “hate working for you” are:
Lazy and under-performing co-workers – particularly when they receive similar pay and most of management’s attention. Managers should dedicate the majority of their time to high performers, and train, motivate or sack under-performers where necessary;

Lack of appreciation or recognition – managers must acknowledge and show appreciation for good deeds immediately, in person and in detail, and be on the lookout for employees doing the right thing;

Communication issues – source important information from employees directly, rather than through the grapevine, interact face-to-face where possible, and remember that communication is a two-way process;

Accountability and responsibility – promote responsibility by giving employees the training and resources they need, and assign accountability. Remember that “managing accountability is a management responsibility”;

Negativity – be “extra positive” when times are tough. Negative words, body language or decisions can affect the team “like a slap in the face”. Provide feedback to negative employees by focussing on their actions, not their personality;

Customers – scrap expressions such as “the customer is always right” from the workplace vocabulary, and listen to workers when they have gripes about clients. The fault could lie with your systems;

Annoying and inconsiderate co-workers – address inconsiderate behaviour – such as poor hygiene and obnoxiousness – by raising the issue with offending employees and showing how their behaviour affects the business;

Lack of teamwork – establish an environment that fosters teamwork. Ensure there is an understanding of the team’s goals and purpose, that each employee understands what other workers do, and that communication channels are free flowing;

Gossip and backstabbing – refrain from participating in workplace gossip, whether at work or in a social environment. Respond to and act on gossip and “office bitchiness” in the same way you would a discriminatory comment; and

Deadlines and time – employees can have difficulty saying “no”, so monitor workloads to ensure they haven’t taken on too much. Clarify responsibilities, supply the necessary tools and resources and offer time-management training.