Fed: Poor jobs ads, home lendiing data show economy still weak

AAP General News (Australia)
04-09-2001
Fed: Poor jobs ads, home lendiing data show economy still weak

By Jim Hanna, Economics Correspondent

CANBERRA, April 9 AAP - The possibility of recession loomed again today with poor jobs
ads and home lending figures suggesting the economy stayed weak in the first quarter of
2001.

While the building industry can at least look forward to interest rate cuts already
in the pipeline and more cash for first home builders, the outlook on jobs remains unambiguously
poor.

This presents a major problem for the government in the lead-up to the federal election.

Whether the economy has technically slipped into recession or not, the growing economic
gloom means voters will feel their jobs are less secure.

Advertised job vacancies fell 7.9 per cent in March to its lowest level in four years,
according to the ANZ Bank's monthly survey.

Together with February's 10 per cent plunge, the figures make up the biggest two-month
drop since recession-era August and September 1982.

Newspaper job ads were 32.8 per cent lower than they were a year ago - the largest
year-on-year decline since August 1991, another recessionary period.

Economists warned the unemployment rate, currently 6.9 per cent, could jump to eight per cent.

"The pace of decline is now starting to resemble what we saw in 1991, which was a more
full-blown recession," said Deutsche Asset Management senior economist Matthew Drennan.

Meanwhile. the building industry's deepening slump was confirmed today with fewer Australians
borrowing to buy homes in February.

Allowing for seasonal factors, the number of dwellings financed fell 4.1 per cent to
43,356 in February, the Australian Bureau of Statistics said.

Hardest hit was lending for proposed new homes, which fell 6.2 per cent to 3,667, its
lowest level in 14 years.

Lending for newly-built homes dropped 9.4 per cent to 1,438 dwellings.

"The housing finance figures add some weight to other evidence that the sector will
not miraculously bounce back to levels of activity seen before the pre-GST surge," AAP
chief economist Garry Shilson-Josling said.

Economists expected a steady result after January's 5.8 per cent drop, given that the
Reserve Bank cut interest rates by half a percentage point in early February.

The government acknowledged the GST's disruption to the building industry when it doubled
the First Home Owners Grant to $14,000 for those building or buying a new home this year.

Opposition treasury spokesman Simon Crean said today's data showed the government's
record as economic managers was in tatters.

"(The) GST increased bankruptcies, pushed inflation to a 10-year high, slashed investment,
drove the building industry to its worst period on record and foisted a mountain of GST
paperwork on the backs of every small business," Mr Crean said.

Master Builders Australia said it was surprised by the weak February figures.

"The February cut in interest rates certainly failed to ignite any interest in the
new home market, suggesting that homebuyers were still quite nervous," said MBA chief
economist Wilhelm Harnisch.

Housing Industry Association chief economist Simon Tennent hoped the higher grant,
announced in March, would end the industry's slide.

"Sales reports for March show that there has been significant interest from the first
home buyer segment since the grant was doubled for those entering the new house market."

AAP jph/sw/mg/de

KEYWORD: ECONOMY NIGHTLEAD

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