Australian economy lurches downward

SYDNEY - Housing price and job ads figures released today confirmed the gloomy state of the Australian economy.

The price of established houses fell by 2.2 per cent between the December and March quarters.

It was the fourth quarterly fall in a row and brought the rate of decline to 6.7 per cent over the year to the March quarter, from 3.9 per cent.

The figures from the Australian Bureau of Statistics (ABS)also showed project home prices fell by 0.5 per cent in the quarter, ending a run of small rises, with annual growth slowing to 2.2 per cent - less than the headline inflation rate of 2.5 per cent - from 4.5 per cent previously.

The significance of the deflation in housing prices extends beyond the housing sector, because asset prices, including housing and shares, are important drivers of the economic cycle.

As such, they confirm negative influences dominate the outlook for the Australian economy and warn an upturn, at least not a vigorous one, is not about to get under way.

The impact of the recession was evident in another data set released today.

The ANZ job advertisement series showed at 7.5 per cent fall in April, with ads in newspapers up by 3.1 per cent and internet ads dropping 8.1 per cent in seasonally adjusted terms.

The trend is clearly downward, falling by 7.1 per cent per month according to the ANZ's calculations to be down by 48.3 per cent from a year before.

The official jobs figures from the ABS are due on Thursday.

The monthly figures are inherently volatile and therefore hard to predict.

Still, figures like the ANZ's, combined with the ongoing contraction in the economy, mean there is a growing likelihood of confidence sapping shocks in the form of sudden, sharp falls of well over 50,000 in the monthly level of employment reported by the ABS.

- AAP