Businesses' hiring intentions turn negative for first time in 2 years

Wednesday, 30 November 2022

A net 4% of businesses expect to employ fewer people in a year’s time.

The jobs market is showing more signs of turning south.

More businesses plan to reduce their staff numbers than take on additional workers over the next 12 months, according to ANZ’s latest monthly business confidence survey.

A net 4% of employers told the bank that they expected to reduce the size of their workforce, which the bank said was the first time responses had drifted into negative territory since October 2020.

The survey was conducted too early in the month to be significantly influenced by a hawkish monetary policy statement released by the Reserve Bank last week, or by subsequent comments from its governor Adrian Orr that the central bank intended deliberately engineering a recession.

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The Reserve Bank substantially hiked its forecasts for official unemployment in last Wednesday’s statement, predicting it would jump from the current rate of 3.3% to reach 4.8% by the end of next year, and peak at 5.7% in 2025.

ANZ said the Reserve Bank had “leapfrogged everyone with their hawkishness” and described the upward revision to its domestic inflation forecast as “startling”.

ANZ’s business confidence survey showed remaining pockets of confidence in the economic outlook were drying up and the bank said confidence in the outlook for housing construction had “tanked”.

A net 57% expected economic conditions to deteriorate in the year ahead, from a net 42% last month, while a net 11% were pessimistic about their own outlook.

The latter figure was only a little shy of lows in 2009, ANZ said.

A net 90% of business polled by ANZ expected the residential construction market would decline in the year ahead.

That could “literally hardly be any lower”, the bank said.

A small silver lining was that the proportion of business expecting to raise their prices over the next three months eased a little, to a net 59%.

ANZ said the survey showed there were a lot of dark clouds on the horizon and the results amounted to a mixed bag for the Reserve Bank.

“The survey clearly indicates weaker activity ahead, which is what the Reserve Bank is trying to bring about in order to lower inflation pressure.”

But inflation expectations jumped back up to a fresh record high, with retailers expecting inflation of 7%,” it said.