Job market reaches a turning point
It is getting slightly easier to find a job and workers are getting longer hours after big cutbacks in the recession, according to economists' forecasts for figures due out later this week.
But pay rises are still hard to find, with wage growth likely to be at its lowest level for about a decade in figures out tomorrow, economists say.
The job market is at a "turning point" with a slight rise in employment expected in official March quarter figures due out on Thursday, according to economists.
ANZ Bank economists forecast a 0.2 per cent lift in jobs, in line with average market forecasts. That would break the year-long run of job losses during 2009.
ANZ also forecast unemployment of 7.1 per cent in the March quarter, down slightly from December, when the rate hit a 10-year high after the recession and global crisis.
Westpac Bank economists said the job market was on "the cusp of a turnaround" with business confidence up.
But Westpac predicted only a slight jobs lift, up just 0.1 per cent. That may not be enough to absorb all the new workers coming into the workforce. Unemployment may keep rising, to 7.4 per cent in the March quarter, though that would likely be the peak, the bank said.
ANZ said working hours were expected to rise 0.7 per cent in the March quarter, the first quarterly increase in almost two years. That would reflect a rise in business confidence and more job ads pointing to more jobs available.
But during the recession, the hours on the job by each worker dropped to multi-year lows and wages growth was low too. That prevented the unemployment rate from getting much higher than it has, ANZ said.
So in the recovery, there was likely to be a rebound in hours worked, rather than an "employment rich" rebound in job numbers, ANZ said. Total hours worked were still 4 per cent below pre-recession levels, so there was a lot of slack to make up, it said. It would take a prolonged pickup in demand for labour before the spare capacity was eaten up.
ANZ said the unemployment rate would improve slightly to 7.1 per cent in the March quarter, from 7.3 per cent at the end of last year.
In figures due out tomorrow, wages were expected to lift an average 0.4 per cent and 1.4 per cent for the year, according to ANZ, the lowest annual levels in a decade. Wages were rising more slowly than general inflation of 2 per cent in the March year. The key figure for wage inflation is the Labour Cost Index, which measures the cost of a given quantity and quality of labour.
"Wage growth is expected to be contained," ANZ Bank said. But the key for the Reserve Bank would be the wage outlook when the job recovery strengthened later this year, the ANZ economists said.
Westpac said the figures would show "depressed wage growth" as the labour market slump eroded workers' bargaining power, with Westpac also forecasting a 0.4 per cent quarterly rise.
Low inflation would have also reduced concerns about the rising cost of living, taking the edge off wage negotiations,Westpac said.
However, ANZ warns of the inflation one-offs on the horizon, with the Emissions Trading Scheme in July, an expected GST rise to 15 per cent some expect in October, and a rise in tobacco excise. These factors would have an effect on "price and wage setting behaviour", ANZ said.
Wage inflation slumped last year, but the test would be whether the lid stayed on wages when the job market picked up, ANZ said.
With the big slack still in the job market, higher wage inflation was not expected to be an "immediate threat".
06/05/2010
