Australian businesses cut back on hiring plans in May, causing a slide in job advertisements in major newspapers and hinting at softness in one of the most resilient parts of the economy, surveys showed yesterday.
Meanwhile, government data showed a sharp fall in new home loans in April,
confirming the Reserve Bank of Australia's (RBA) tightening campaign was working to cool demand for credit in its battle against inflation.
Higher interest rates also seemed to be having an impact on labour, with National Australia Bank's monthly survey of business finding a marked cutback in hiring intentions in May.
The labour market has been one of the strongest parts of the economy this year, with employment consistently on the upside even as consumption and business confidence slumped.
"There does appear to be some evidence of a more significant rethink by business about the demand for labour going forward," said Alan Oster, group chief economist at NAB.
That trend seemed to be echoed in job advertisements, which fell 1.7 per cent in May according to an ANZ Bank survey. Ads in major newspapers alone fell by 13.5 per cent.
A slowdown in employment growth could augur ill for the Government's monthly report on employment, due tomorrow. Analysts had been looking for a rise of 13,500 in net new jobs in May, with unemployment holding at 4.2 per cent.
Yet some easing in the labour market would be a comfort for the central bank, worried that demand for scarce workers would drive wages higher and so add to its inflation problems.
The RBA has raised interest rates twice this year, taking them to a 12-year peak of 7.25 per cent, as it strove to restrain inflation.
That tightening has been a clear drag on the appetite for credit. Yesterday's figures on housing finance showed a 3 per cent drop in the number of home loans taken out in April, with new lending dropping by 5.8 per cent in the month to be down 17.3 per cent since February.
- REUTERS
