Jobs squeeze continues but inflation moderate… for now
The Australian economy’s miracle run appears to be continuing, as new economic data shows inflation at moderate levels despite the worsening jobs squeeze.
New job advertisements surged by a massive 10.3% in May, according to today’s ANZ job ads survey.
It is a testament to the crushing skills shortage facing Australian businesses that the average 251,998 job ads per week that appeared in May is 40.8% higher than the same time in 2006.
A 9.3% increase in newspaper jobs ads in South Australia was the biggest factor in the increase, followed by Western Australia (7.8%) and New South Wales (6.5%). Only Tasmania and the ACT went backwards.
“In short, the demand for labour is booming,” ANZ head of Australian economics Tony Pearson says.
“The rate of unemployment is already down to a 32-year low of 4.4%. Given very robust demand for new workers, there is now a good chance that the unemployment rate will fall again to new lows over coming months. In this environment, policy makers will remain alert to any signs of an inflationary acceleration in wages growth,” Pearson says.
Wages growth in the past quarter has been moderate. Figures released by the Australian Bureau of Statistics today show wages and salaries, excluding the reclassification of Telstra, rose by 2.4% in the quarter, following a 3.2% rise in the December quarter.
But any pressure on the Reserve Bank to raise interest rates when it meets tomorrow have been relieved by the moderate 0.1% rise in inflation for May recorded by today’s TDSecurities/Melbourne Institute inflation gauge.
The 0.1% result gives an annualised rate of inflation of 2.6%, well within the Reserve Bank’s target inflation band of 2% to 3%.
– Mike Preston
Telstra to show broadband hand
Telstra has moved to strongly defend its broadband credentials by revealing that it has already locked in major suppliers to construct a fibre-to-the-node network and committing to release details of its broadband price structure later this week.
The release of a broadband pricing and access proposal by the rival G9 consortium of telcos last week appears to have stung Telstra into action, prompting a major assault on the Optus-led group’s credibility .
Telstra told journalists on Friday night that it could start rolling out its fibre-to-the-node network in just three months, and could have 98% of Australia connected in less than four years. The G9 has yet to commit to a rollout timeframe.
And Telstra has also sought to clear the way for the release of its own price proposal later this week by claiming the G9’s $40-$50 wholesale monthly price for 24mbps broadband is not as attractive as it appears because that price could increase significantly after an initial three year lock-in period.
It is likely Telstra will propose a maximum wholesale access price of around $80 per month for higher speed 50mbps broadband and, by contrast with the G9 proposal, will lock in prices for 13 years.
– Mike Preston
Is the appetite for political change beginning to fade?
A Galaxy Poll shows Labor still leads the Coalition 53% to 47% on a two-party preferred basis, but there has been a notable narrowing of the gap when compared to previous polls.
But Prime Minister John Howard says he still has a long way to go. He also dismissed private Labor polling that shows people were uncomfortable with Treasurer Peter Costello tasking the top job, saying it was Labor Party spin designed to “damage Peter”.
Climatic confusion
The climate debate took one step forward and two steps back yesterday. First Prime Minister John Howard asked the nation to trust him that the Coalition would handle climate change without wrecking the economy.
Then he said he will not set a target for emission reductions until after the federal election. On top of that it appears the greenhouse unit set up in the federal Treasury Department to look at the impact of climate change policy had done no modeling on the costs of climate change. It also had not looked at the impact of carbon pricing on households.
Meanwhile China will announce its climate change strategy today and a ferocious debate on climate change is expected at the G8 summit of industrialised economies this week after George Bush called for a new framework to be introduced in which the world’s biggest carbon polluters will set long-term goals for curbing greenhouse gases.
– Amanda Gome
Childcare entrepreneur Eddy Groves raising more money for growth
Last week entrepreneur Eddy Groves was pounding the pavement seeking more capital to further expand his childcare empire ABC Learning. The billion dollar deal includes selling a 12% stake for $400 million to the Singapore Government’s investment company, Temasek, to accelerate ABC’s buying spree of US child care centres.
Yesterday, Groves told Alan Kohler on ABCTV’s Inside Business that he believes there is an opportunity in the United States to change the childcare culture and revolutionalise the business. “[The US] currently spends $11.7 billion annually in some sort of shape, way or form for early childhood education, but because of the size of the population it doesn’t densely get to the pockets of most parents.”
Groves, who now only holds 7.5% of the company’s stock, says ABC Learning will use other brands in the US. “We currently have four brands and we have some Montessori Schools, 29, and there is no real one national brand. I mean, as I said, there is 120,000 centres and anyone who would think they could dominate that with one brand would be kidding themselves.”
Brisbane-based Groves made BRW’s rich list this year with a personal fortune of $295 million, down from $325 million. The decline is thanks to a falling share price. Shareholders are worried about the US expansion and the company has not been meeting analysts’ profit expectations.
– Jacqui Walker
Foreign staff employers to face greater scrutiny
Businesses that employ foreign staff on s457 temporary work permits will soon face greater scrutiny, a Federal Department of Immigration and Citizenship (DIAC) official has revealed.
DIAC will add 30 staff to the current 62 person contingent it has dedicated to monitoring employers and investigating suspected breaches of s457 visa conditions, The Australian Financial Review reports.
And it may also be set to tighten up its monitoring regime after questioning before a Parliamentary committee on migration revealed that DIAC gives employers notice before visiting a workplace for monitoring purposes, prompting a DIAC official to agree that unannounced spot checks would be a better way to catch rogue employers.
DIAC has been under pressure from employer groups and the recruitment industry for the slow rate at which s457 visas are processed. Businesses can be left in the lurch for three to four months after a foreign worker is selected while visas are processed, often resulting in the loss of work opportunities.
Don’t miss SmartCompany’s Top Story tomorrow for tips and tactics on navigating the red-tape nightmare many businesses face when recruiting overseas workers.
– Mike Preston
Unfair AWA? Let’s consult
Unions have criticised the Federal Government’s fairness test for leaving staff without any viable appeal mechanism if they disagree with the Workplace Authority’s assessment.
The Australian Council of Trade Unions has obtained legal advice that the only option for employees who disagree with the Workplace Authority’s assessment of the fairness of their AWA is to appeal to the High Court, a process it says is so costly and time consuming as to be impractical in the vast majority of cases.
Workplace Relations Minister Joe Hockey described the claim as “deceitful,” according to an ABC report, but did not respond to the substance of the ACTU’s claim.
Hockey says peeved workers can consult with the Workplace Authority and that the Government is planning to implement an appeals process similar to that which was in place for the old “no disadvantage” test.
Make sure you visit SmartCompany.com.au tomorrow to read our legal update on what the new fairness test means to you.
– Mike Preston
IT News: Microsoft deal concerns online advertisers
The software monolith Microsoft’s $7.2 billion purchase of digital marketing company aQuantive has been described as an online equivalent of a traditional media company, such as News Ltd, buying a marketing services firm such as STW Communications Group and a media agency such as MediaCom.
aQuantive has an ad-serving business and marketers and ad agencies are worried that companies are increasingly controlling both the medium and the means of advertising on it.
That’s not all online advertisers are worried about. The Australian Financial Review reports that last week 30 media and advertising executives met to begin discussions on developing a new audience measurement system for the online industry. The meeting, organised by the Interactive Advertising Bureau, had widespread agreement on the need for one set of measurements.
They don’t want to measure browsers or visitors or unique audiences, but people. Currently, Australia uses Nielsen//NetRatings, individual website logs, surveys by Roy Morgon research, Hitwise, Google and comScore.
– Jacqui Walker
Economy round-up
Australian Bureau of Statistics business indicators data released today showed that nominal company gross operating profits rose by 7.6% in the March quarter 2007. Much of this increase reflects the inclusion of Telstra in the data; removing this effect, company profits increased by 2.1%, down a little on the 3% rise in the December quarter.
By industry, profit growth was strongest in transport and storage (9.8%), retail trade (5.5%) and property and business services (3.5%). Profits were also strong in manufacturing (4.1%) and other selected industries (47.7%), although growth in these categories was distorted by the inclusion of Telstra. Declining profits were reported in wholesale trade (-3.8%), mining (-1.5%) and construction (-0.1%).
Inventories increased 0.5%, gross profits 7.6% (2.1% without Telstra). The inventories result exceeds market expectations of 0.2% growth and could mean a quarterly result GDP result above the expected 1.1% when the data is released on Wednesday this week.
At 12.30pm the S&P/ASX 200 is up 45.4 points to 6378.9 and the Australian dollar is trading at US83.13c, down on the most recent Sydney closing price of US83.26c
– Mike Preston
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