Looking for jobs? You might not find them on the classified ads

Recruitment advertising spend first to get hit. The Ministry of Trade and Industry has forecast anaemic economic growth of 1.0-3.0% for Singapore next year. While bellwether stock Singapore Press Holdings (SPH) registered growth in print advertising and circulation revenues for FY Aug11, the average page count of The Straits Times Saturday edition in the past three months reveals that advertising spend, particularly on recruitment, has taken a hit.

Recruitment ad volume markedly lower. Recruitment ads, which typically account for about 40% of classified ad revenues, are showing steep declines in volume lately. The average page count for the Recruit section tumbled by 19.0% YoY during the three months from August to October this year. Even during the traditional peak hiring season from March to May, the recruitment ad volume was markedly lower than the corresponding period last year.

Display ads to hold steady. Classified ad volume as a whole has also shrunk during the year, but the magnitude of contraction is no major cause for concern. Classified ad revenues accounted for only about 30.1% of print ad revenues in FY Aug11, which in turn accounted for 60.9% of SPH’s total revenue. The bulk of print ad revenue comes from display ads, which continue to enjoy firm demand from 12 economic sectors, including telecommunications, property, fashion and beauty, and retail.

GDP growth correlates with print advertising demand. The close link between SPH’s newspaper advertising revenue and Singapore’s GDP growth still holds with a correlation of 0.9. History reveals that the newspaper ad revenue and pre-tax profit of the group’s News & Magazine segment experienced significant contractions during the years when the GDP declined.

Risk on the downside. Our newspaper advertising revenue growth assumption is pegged to Singapore’s forecast GDP growth. That the ongoing European financial crisis might erode growth further could lead to a downward revision in our revenue assumption.