Thursday, February 12, 2009

RECESSION WITH MALAYSIAKINI: Job growth heads down the gurgler

Job growth
heads down
the gurgler

By Ed Logue
February 09, 2009

THE outlook for employment growth has slumped to its lowest level in 20 years as the deteriorating economy continues to bite staffing expectations and profit growth, a survey finds.
The Dun and Bradstreet (D&B) business expectations survey slumped to its lowest indicator of employment growth since it began in 1988, with 24 per cent of firms expecting to shed staff in the June quarter.

The survey found 60 per cent of executives forecast declining profits in the June quarter and 53 per cent predict falling sales.

Ten per cent of firms expect to lower their investment in capital.

D&B chief executive Christine Christian said Australian executives were feeling the effects of the global economic slowdown flowing through to the Australian economy.

"There is no doubt that businesses are facing a significantly heightened risk environment in 2009," Ms Christian said.

"As a consequence, an unwavering focus on business fundamentals and proper cash flow management is absolutely critical to maintaining the sustainability of Australian firms.

Interest rates were ranked as the primary influence on a firm's operation in the June quarter by 55 per cent of respondents, with 67 per cent of retail executives ranking rates first, the survey said.

This was despite the Reserve Bank of Australia (RBA) lowering the cash rate by four percentage points since September to a 45-year low 3.25 per cent.

Only 19 per cent of executives ranked fuel costs as their main concern on operations compared with 33 per cent the previous survey. During the period the cost of fuel dropped significantly to around a $1.00 to $1.20 for a litre of petrol.

D&B economic consultant Duncan Ironmonger said Australian firms were expecting an "exceptionally challenging" 2009 due to the economic slowdown.

"The prompt and substantial fiscal stimulus packages from the federal government and the record sharp reductions in interest rates by the Reserve Bank should offset a significant amount of the impact that the world financial crisis and global recession are having on Australian firms," Dr Ironmonger said.

"Lower oil prices are helping to contain household and business costs and the lower value of the Australian dollar is encouraging exports and domestic spending.

"Consequently, the worst expectations of Australian businesses may not eventuate."

[Job growth heads down the gurgler, Australia]