Deloitte report cites hiring freeze trend in private sector
Australia’s economy may be on the way towards a recession, according to a Deloitte report.
In surveying 84 chief financial officers — or those in charge of the books — from Australia's top 200 companies, the feedback suggests the private sector has entered something of a hiring freeze.
"They've got some confidence with their own business performance but it's confidence that's coming out of demand increasing slowly over time, not so much out of increased employment," Deloitte partner David Rumbens said in an ABC article.
Deloitte expects the unemployment rate, currently at 4.2 per cent, to peak at 4.5 per cent, and that means 101,500 more Australians will lose their jobs over the next 12 months.
These numbers trigger the so-called "Sahm Rule" recession indicator, Canberra University economics professor, Leonora Risse, said in the ABC article.
"That formula is very much based on the US economy," she said.
The indicator is named after the US economist Claudia Sahm, and takes the average of the unemployment rate for the past three months.
If that average increases by 0.5 percentage points above the lowest unemployment rate recorded in the prior 12 months, it means the economy has entered a recession or is on the path toward one, said the ABC article.
"But if we look at the Australian data, if we plug those numbers into the formula, it's telling us that the rate of increase in Australia's unemployment rate would be consistent with a pattern that's heading towards a recession," Robert Half director Nicole Gorton said in the article.
She also warned that further talk of possible higher interest rates by the Reserve Bank could accelerate the increase in the unemployment rate.
Job seekers across New Zealand can expect an "even tougher market" in the coming months as the country slips into a recession, according to an earlier report by SEEK NZ.
