The recession has started?

[gfresh]

Beej: The ANZ number of job ads have generally seen as a more reliable forward indicator. The regular unemployment figures have trailed this over the last couple of decades.

With a -4.9% reduction in the last month in job ads, employment in a few months may not look so healthy.

Will have to see of course, nothing is ever certain.

dhukka has posted such data on his website with a nice comparison of the measured rate and the ANZ ad index (http://www.fundamentalanalyst.blogspot.com/

 

[dhukka]

So while everyone was busy posting here all the headline job losses through August, it seems that more broadly the economy was chugging away quite nicely and may have actually ADDED nearly 15,000 jobs - bringing the unemployment rate down to 4.1% - that doesn't sound like a recession yet to me!

http://business.smh.com.au/business/surprise-jump-in-jobs-20080911-4e9c.html

To be honest, this exceeded even my more optimistic (or is that less pessimistic?) views on what might have been happening with employment over the past couple of months.... I am wondering even if the figure may be adjusted down next month?

Cheers,

Beej

No doubt the employment report was a little better than expected but nothing to get overly excited about. Consider that the Australian economy needs between 15 -20k job growth per month just to keep the unemployment rate steady. So why did the unemployment rate fall? Simple, the participation rate or the number of people looking for work, fell.

The abs has been making changes to their survey data, basically reducing the size of their survey which has the effect of increasing the error rate. So there will definitely be revsions but they could just as likely be to the upside as the downside.

Also remember that the employment numbers are a lagging indicator. By the time the employment numbers confirm a weak economy the slowdown is well underway. If we are going into recession you wouldn't expect to see back to back declines in employment until 2009.

 

[dhukka]

Beej: The ANZ number of job ads have generally seen as a more reliable forward indicator. The regular unemployment figures have trailed this over the last couple of decades.

With a -4.9% reduction in the last month in job ads, employment in a few months may not look so healthy.

Will have to see of course, nothing is ever certain.

dhukka has posted such data on his website with a nice comparison of the measured rate and the ANZ ad index (http://www.fundamentalanalyst.blogspot.com/

Beat me to it.

Job Ads Signal Warning for Labour Market

 

[Beej]

Also remember that the employment numbers are a lagging indicator. By the time the employment numbers confirm a weak economy the slowdown is well underway. If we are going into recession you wouldn't expect to see back to back declines in employment until 2009.

Yes yes all true - BUT this thread was full of headline articles about job losses announced during August - yet the August net employment numbers are quite good. Perhaps all those losses haven't yet hit the figures? Who knows, but all I know as that in my experience the longer doomsayers "predict" a downturn without it eventuating, the less chance that it is actually going to happen, or be as bad as predicted. The real bad ones take almost everyone by complete surprise....

Cheers,

Beej

 

[pepperoni]

Beat me to it.

Job Ads Signal Warning for Labour Market

Whoa nice web site!

Ive been following threads like this and the severe correction thread and I notice there are are some real guns posting Im just too new to put the names to all the good posts I read!

I did notice Dhukka posted the lehman results here before they could be found through google news .. I eventually found it myself on the lehman website.

 

[dhukka]

Yes yes all true - BUT this thread was full of headline articles about job losses announced during August - yet the August net employment numbers are quite good. Perhaps all those losses haven't yet hit the figures? Who knows, but all I know as that in my experience the longer doomsayers "predict" a downturn without it eventuating, the less chance that it is actually going to happen, or be as bad as predicted. The real bad ones take almost everyone by complete surprise....

Cheers,

Beej

Once again Beej, where were all these predictions of massive job losses in August? Quote me one. You and I both agreed a few pages prior that job losses announced don't mean they are laid off straight away. Posts here suggested job losses are on the way. And they most certainy are, all the evidence points to it and today's report doesn't detract from the case. Whether that eventuates into recession like job losses is another matter.

 

[Green08]

The Sydney Morning Herald - Weekend edition Sep 27 - 28 2008 Pg 28

"Since 1788, Australia has experienced 26 recessions and four depressions. In total, they account for 22 of Australia's 220-year history of European settlement. The good times overhwhelm the bad. Only four in a hundred Australian's experienced the antion's last depression from 1929 to1933, and they would have been very young then.

....The depressions occurred in 1788-89 (Captain Arthur Phillip's colony), 1840 - 1846, the 1890's and 1929 - 33..."

 

[Glen48]

John Howard won the last election he could have done a lot more with the money and time in power instead of spending $380M running a GST unchain ny heart, buying vote add's. etc
He is now out of power and doesn't have to answer to any one and gets all the perks.
I wonder where we would be now if Withlam have of got his Kemlani money to buy back the farm?
We might not get much of a recession it could go straight to a depression.
I have sold my house and could buy back in again in 2015 when they have bottomed.
29/08 Brisbane paper had add's to Bently's, Ferarri, Lambo's etc for sale the first time I have seen 30 add's on the one page. A UK car lot use to have 10 Porches now has 80.
MY shop lease is due for renewal 01/09 and I won't be signing even if income doubled.
I am going to sit here and hope youse all (Fench speak ) shine a light for me.

 

[Smurf1976]

Posts here suggested job losses are on the way. And they most certainy are, all the evidence points to it and today's report doesn't detract from the case.

Cadbury is about to get rid of another 17 employees in Hobart.

Also there are very strong rumors, not being denied by the company, that Incat may axe up to 200 non-permanent staff.

Meanwhile timber giant Gunns is attempting to sell off quite a bit of its' timber resources in order to reduce debt. That sounds a tad ominous.

The only good news is the rain which is helping improve the Hydro's situation and is presumably helping farmers as well. Both have been hit hard by the 11 year drought and whilst there's been nowhere near enough rain to say it's over, at least it is actually raining.

 

[Smurf1976]

Also there are very strong rumors, not being denied by the company, that Incat may axe up to 200 non-permanent staff.

21 gone so far in two separate cuts.

 

[gfresh]

Looks like there will be cuts for Suncorp quite soon.

I'm not sure how things will play out for QLD. We have a lot less large businesses headquartered here than in Sydney and Melbourne. There is the money that comes from coal, and agriculture, but hard to say whether that will drop off or not. Lots of both public and private construction going on in Brisbane.

Any thoughts?


http://business.brisbanetimes.com.au/business/clouds-gathering-over-suncorp-20081001-4s2f.html

Clouds gathering over Suncorp

MichaelWest | October 2, 2008

The job losses have begun at Suncorp. In an email from its chief executive, John Mulcahy, to staff yesterday - obtained by BusinessDay - he said there would be "changes to the level of work across our organisation".

The memo put no number on the redundancy program. Sources close to management said last month the plan was to sack or redeploy 1500 people.

A spokesman for Suncorp said earlier this week that Suncorp did not have a particular figure in mind for redundancies. There was no budgeted number, he said...

 

[moXJO]

All new large jobs have now stopped coming in the past 3 weeks. Might get one final push of construction with the fhog in the coming months before it gets really quiet.

 

[chops_a_must]

My engineer mate who alerted me to AED's failings well before they were known, who does a lot of project work for Woodside, says that Woodside have been getting rid of contractors left, right and centre. North Rankin B is all but completely off.

And the project he is working in now, is likely to be the last design work Woodside is likely to put out for quite some time. And everything they have already done now is going to be shelved until a later date. And that means everything...

Apparently this is sector wide with the oil and gas industry as well.

West Perth is going to be a very vacant place once again if these engineering groups stop getting work...

 

[bribieman]

I have the same info, Minning industry will have to lay off thousands. If it costs 2.65 a pound to get copper out to exchange and the market price in 1.70 per pound it is only a short amount of time to see some mines close until prices recover.The finance industry after this savings G'tee crisis will be alot lighter. If your a fund Manager or admin staff for one these frozen Funds I reccommend seek.com.au. They seem to have nowhere to go.

Once the public see that Australia hands out 9.4 miilion a week in hand outs to the car industry that delivers 5% of purchases to australian consumers. One also would think that industry will also be shut down. This has gained momentum this week due to GM and CHRYSLER 10billion merger request.

So Jobs are not looking good for the next 2 years.

Looks like "R" to me?

 

[gfresh]

.. estimated 10,000 jobs to go from the banks by September next year That's 6.5% of workforce.

http://www.businessspectator.com.au...s-to-cut-10000-jobs-in-fis-KX2TK?OpenDocument

KPMG predicts Aust's banks to slash 10,000 jobs in fiscal 2009

By a staff reporter

A leading auditor has estimated that Australia's major banks will cut 10,000 jobs in fiscal 2009 to cope with the slowing economy.

Andrew Dickinson, who is head of banking at professional services firm KPMG, told a media briefing in Sydney that about 10,000 of the industry's 152,000 staff could lose their jobs in the year to September 2009, as banks reduced costs.

Mr Dickinson said about 10 per cent of the workforce at St George Bank Ltd would probably have to go over the longer-term, as a result of the takeover of the bank by Westpac Banking Corporation Ltd. Westpac expects to carry out the merger by December 1, if St George shareholders vote in favour of the tie-up in November.

Mr Dickinson was speaking at the release of the KPMG Annual Survey of Australian Bank Profits.

 

[Aussiejeff]

I have the same info, Minning industry will have to lay off thousands. If it costs 2.65 a pound to get copper out to exchange and the market price in 1.70 per pound it is only a short amount of time to see some mines close until prices recover.The finance industry after this savings G'tee crisis will be alot lighter. If your a fund Manager or admin staff for one these frozen Funds I reccommend seek.com.au. They seem to have nowhere to go.

Once the public see that Australia hands out 9.4 miilion a week in hand outs to the car industry that delivers 5% of purchases to australian consumers. One also would think that industry will also be shut down. This has gained momentum this week due to GM and CHRYSLER 10billion merger request.

So Jobs are not looking good for the next 2 years.

Looks like "R" to me?

According to experts at the URBA (Un-Reserve Bank of Australia) -

- They are very happy with the way the finance sector has responded to URBA market manipulations.

- They insist there will be no recession in Australia.

I love the men in black at the URBA.
I feel totally secure when they speak such comfortings.
I do so love it now they are manipulating the markets on a dailly basis. It feels like a jolly good massage.. ooo-er.
I love that the URBA never worry us with confusing, nasty "monetary" figures. You know, how much they are throwing into the Big Bonfire every day. They just wave the ol' magick wands and all our problems go *poof*.

 

[Glen48]

From DR.
U.S. government debt grew by $800 billion between September 1st and yesterday? Seriously. Nearly half that is since the first of October alone.

When people talk of economic crises they inevitably refer to the Wall Street crash of 1929 and its aftermath in the Great Depression. That is the classic crash, just as the 1720 London collapse of the South Sea Bubble was the classic crash of the eighteenth century. Incidentally, for those who would like to align the business cycle with the cycle of sun spots, 1720 to 1929 is 209 years. If the solar cycle is taken as 10.45 years, then the gap from the South Sea Bubble to the Wall Street crash is precisely 20 solar cycles. The 1929 crash seems to confirm the calculations made by the Victorian economist William Stanley Jevons in the late 1870s. His observations could have been used to forecast the Wall Street crash fifty years before it happened.

I am rather sceptical of these precise cycles, but the similarity of different crises, the big and the little, is undoubted. They give us the best indicator of what to expect next. Banking crises are followed by recessions. That is the history of the past and it is only too likely to repeat itself now.

William Rees-Mogg

 

[Glen48]

I heard Autobarn is in receivership?

 

[grace]

Here is Charlie Aitkin's feedback from a few on what is happening in our economy. As it is not really advice, but just feedback from the public, I posted it up here......

So below is a "no names summary" of what is going on in certain parts of the Australian economy.

I suppose the most concerning thing for me was the consistent feedback from the SME sector that "days debtors" were blowing out. Common feedback was "people are taking longer to pay", "it's hard to get paid", and "financing inventory is particularly difficult". Interestingly, many SMEs reported that consumers were now using cash or EFTPOS rather than credit cards to spend, which either means credit cards are "maxed out", or consumers are actually using savings over credit to fund purchases. Similarly, there are many people reporting that the major credit card companies are being far more vigilant in policing account balances and arrears. Even I have had a call from Amex about an account balance and I have never paid an account late! I suspect consumer credit is getting significantly tighter as you would expect in a "credit crisis".

A couple of SMEs also told me that Armaguard (Linfox), the cash delivery company, had sent them a letter saying they were "short of $100 notes" and expect to be for some period. That begs the question how on earth did the economy become "short $100 notes" in a credit crunch? The answer lies in the numerous million-dollar cash withdrawals that high-net worth individuals and unlisted corporates did over the last month from major Australian banks. People did walk into bank branches and withdraw all their cash to the point where we now have a "$100 note" shortage in Australia. Truly amazing, but a trend that should reverse with the government's deposit guarantee.

On a more serious note, there are also reports of children being pulled out of private schools and similarly waiting lists for private schools suddenly shortening. It also clear that waiting lists for private clubs and golf clubs have also evaporated. Some clubs are offering reduced "entrance fees" while other are offering "deferred entrance fees". I am also hearing from the licensed pub and club sector that poker machine revenue is starting to fall while consumers are switching back to lower-cost alcohol. The great "sauvignon blanc" bubble may have burst!

Residential real estate agents tell me I am grossly underestimating the number of houses actually for sale. They believe the number of high-end houses "quietly" on the market may actually outweigh those physically listed. Nobody wants the embarrassment of the "for sale" sign outside their house and there are apparently a mountain of properties for sale that aren't physically listed. This will take some time to resolve and high end residential real estate vendors need to revise their price expectations down by about 25%, according to my real estate agent contacts. This may happen during 2009.

Commercial real estate agents are even more bearish. The emergency equity issues from the LPT sector are telling you how bad it is in the commercial property sector. The commercial property sector is "seller no buyer"; literally. Many LPTs were breaking bank loan to value ratios on commercial property and because they can't sell the property they have been forced into deeply discounted emergency capital raisings to recapitalise balance sheets and appease the banks. The LPT index has wiped out 12 years of gains and one thing I can claim to have called right is calling LPTs "listed property timebombs" and forecasting a five-year bear market for LPTs. We are 18 months into that five-year bear market for LPTs. If only I had realised the "timebombs" were all forms of leverage, not just LPTs.

Used and new car sales are a complete bloodbath. It's so bad most used car dealers aren't even bidding on stock for fear of not being able to move it. This is not just about finance; it's about demand evaporating in the new and used car markets. As one very high-end car dealer told me:"The luxury car market is offered with no bid." When the dealers won't even make a bid you know there is a major problem. I am told Volvo sold 54 new cars nationwide last month compared with an average of 300 a month, while SAAB sold just four cars nationwide last month. If those statistics are right they are alarming and show this is mess is moving into middle Australia. I am yet to get the numbers on Holden, Toyota and Ford.

Travel agents report a similar stalling of both individual and corporate travel. Business is dramatically cutting back travel spend and making executives travel economy-class on longer-haul flights. The collapsing Australian dollar has seen many offshore trips cancelled by households. It's not pretty in corporate or individual travel but that could hardly come as a surprise to any of us. Probably not great for Flight Centre, Virgin Blue, Macquarie Airports or Qantas in the shorter-term despite fuel costs falling.

The advertising markets have hit the wall. I am now hearing reports that activity has collapsed so dramatically that major media sector employers are wielding the knife aggressively in terms of staffing. Melbourne is worse than Sydney, according to my contacts, and I'd expect another round of downgrades to earnings for domestic media stocks with the interim results in February to be very ordinary. Clearly, the private equity buyers of Australian media assets are in for a nasty period as are those banks who lent to those syndicates.

In fact, just about anyone in a service industry is claiming there is evidence of a very big winding back in capital expenditure and outsourcing by big business. Contracts that end don't get renewed and the big end of town is really winding back spending. Again, this has ramifications for just about all small-cap listed industrials. The only place increasing spending is the government, so there will be some defensiveness in those who service the federal government.

The fine art world has similar issues, with collapsing clearance rates and increasing stock for sale. Art was most likely a bubble and the correction here could be dramatic. All feedback points to an imminent collapse in the high-end art market. Dealers hopefully tell you "art is a defensive asset class", but I think we are about to find out that is not correct. A painting is only worth what someone else will pay for it and it's hard to identify who that someone else is right now. Get ready for some cheap paintings over the next 12 months as art investors are also forced to deleverage.

Similarly, there's plenty of debate about the thoroughbred horse market. The optimists say "oil money, coal money and restocking" will support the yearling market. My contacts suspect that is very hopeful thinking and they expect the yearling sales to see solid price drops in anything outside of the very best lots. It's the middle ground in yearlings that will be hit hardest. Yes, the top end will also correct, but the clear global trend in the horse trade is the middle ground has been collapsing. Clearly, horses are a "luxury and lifestyle" item for most and I can't see how the thoroughbred market isn't involved in the global correction in "luxury and lifestyle". Get ready for some cheap yearlings over the next 12 months as bloodstock investors are forced to deleverage. My contacts understand there is a tonne of investor leverage in the yearling space.

 

[moXJO]

Quiet for about 2-3 weeks before work started to come back in again. Shops are packed full (not sure if people are spending as much though). I was looking at buying another work ute a Nissan navara or Toyota hilux second hand called up three different car yard listings in the paper and all had sold that day. I know actual state and national figures are far from rosy and a lot are doing it tough. But I think the majority of people my way seem to not be caring to much about financial doom and its life as normal with money being a bit tight. In day to day life this whole crisis has not been as bad as it could have.

Whether Australia is just enjoying an extended lag period before it all catches up with us remains to be seen. I was banking on a nasty downturn but would be happy if we avoid it. Next year may well be the deal breaker though. This whole process seems to be very slow moving. Perhaps it was because I was waiting from the housing price peak in anticipation of bargains down the track. One hell of a wait.