Jobs improvement will be slow: experts

The federal government's economic forecasts in last week's mid-year budget review
were seen as conservative, but new data suggests there may be good reason for its
more cautious outlook.

Demand for new workers weakened in October with job advertising falling by nearly
two per cent, after just two months of growth that ended over a year long run of
declines.
And a spike in demand for home loans in September data released on Monday was caused
by first time buyers rushing to claim the full benefit of the government's generous
housing grant, but rising interest rates are likely to moderate future demand,
economists say.
The ANZ job ads series - a key pointer to future employment growth - fell by a total
1.7 per cent in October for vacant positions placed in major newspapers and online.
Despite rises of 4.4 per cent in September and 4.1 per cent in August, the annual
rate was still down a hefty 44.9 per cent.
"This highlights that while business confidence and conditions have certainly
improved over the second half of 2009, the rate of improvement in the labour market
may yet be quite gradual," Macquarie Research associate economist Ben Dinte said in
a research note.
Official labour force data for October will be released on Thursday.
It is expected to show the unemployment rate edging back up to 5.8 per cent after
unexpectedly falling from that level to 5.7 per cent in September.
In last week's Mid-year Economic and Fiscal Outlook, the government revised down its
peak for the jobless rate to 6.75 per cent by June next year from a previous
prediction of 8.5 per cent in mid-2011.
Demand for home loans jumped by its biggest margin in nine months in September, in
what appears to have been a last-minute rush by first home buyers to secure the full
benefit of a more generous housing grant.
Owner-occupier home loans rose by a seasonally adjusted 5.1 per cent to 65,505
mortgages in September, ending two months of slowing demand, according to Australian
Bureau of Statistics data.
Economists' forecasts had centred on a three per cent rise for September.
The proportion of loans granted to first time buyers was 26.1 per cent in September,
up from 24.7 per cent in August. However, it remained below the record 28.5 per cent
peak set in May.
ANZ economist Alex Joiner said the figures represent one last surge from first home
buyers.
"We anticipate that activity from this segment will begin to moderate in the coming
months' data, from what has been frenetic activity over the past six to eight
months," Dr Joiner said.
"This is not only as the grants are wound back but also as interest rates rise."
From October 1, the federal government's increased first home owners grant was cut
to $10,500 from $14,000 for established homes and to $14,000 from $21,000 for new
properties.
The grant returns to its original $7,000 for both categories from January 1 next year.
Over 150,000 people have taken up the increased grant since it was introduced in
October 2008 as part of the government's first stimulus measures to combat the
impact of the global financial crisis.
Monday's housing finance data precedes the two interest rate rises made by the
Reserve Bank of Australia (RBA) in October and November and economists expect
further increases in coming months.