JOB ADVERTISING CONTINUES TO STRENGTHEN
- Job advertisements rose a further 2.2% m/m in April. Job advertising has recovered this year, having risen for four consecutive months at an annualised rate of nearly 30% over this period. This is broadly consistent with other measures of job ads/vacancies which have also improved or at least stabilised since the middle of last year.
- In trend terms, job ads are trending higher by 1.5% m/m and have risen for five consecutive months. Continuing increases in job ads historically have been a reliable indicator that the next move in interest rates is up. Job ads are now 1.5% higher than a year ago, which is quite an improvement compared to annual declines of nearly 20% recorded in the middle of last year.
- While internet job ads rose 2.7% m/m in April, newspaper job ads fell a sharp 11.8% m/m. The sharp fall in newspaper job advertising is likely due to the timing of the Easter and ANZAC day public holidays. It is also likely that due to the close proximity of these public holidays, businesses decided to delay some job advertisements. Nonetheless, newspaper job ads have been deteriorating at a much slower rate over the past year, and fell by a modest 0.3% m/m in trend terms in April.
- The sharp declines in newspaper job advertising this month due to the Easter and ANZAC Day holidays severely distort state-based newspaper trends and make commentary about state movements ill-advised in the month. The encouraging emerging trends remain the recovery in job advertising in NSW, Victoria and Queensland, Australia’s three largest states, which together account for just over three quarters of Australian GDP.
ANZ Chief Economist (Australia) Ivan Colhoun said:
- “Labour demand has strengthened this year, with each of the main job ads/vacancies measures improving gradually, or at least stabilising over this period. While the pace of improvement in job ads suggests that labour market conditions have only improved moderately at this stage – and therefore do not suggest a rapid turnaround in the unemployment rate - the pick-up in hiring intentions suggests employment growth will continue to improve modestly in the near term and the unemployment rate should be close to a peak around 6% or slightly lower.
- Economic activity has continued to strengthen this year, with momentum in the housing sector continuing to drive prices higher, building approvals remaining on a solid uptrend and consumer spending generally strengthening. This suggests that low interest rates are assisting the economy’s transition to non-mining sources of growth.
- The prospect of a larger-than-expected fiscal contraction, however, poses some risks to this outlook. More specifically, the mooted introduction of a temporary deficit reduction levy will impact consumption both directly and indirectly. The direct hit to incomes from the tax as is currently suggested will likely trim growth and consumer spending a little this year (around 0.25% of GDP). The coverage of the leaked policies in the media to date appears to have already weighed on consumer confidence, with ANZ–Roy Morgan consumer confidence declining by 4.4% in the week ending 27 April. While the budget will provide necessary clarity on these issues, ANZ’s view is that the combined impact of these factors is likely to keep the recovery in the economy moderate and interest rates unchanged this year.
- On Thursday, the ABS releases the April labour market report. ANZ expects that employment rose by 17,000 in April and that the unemployment rate will have risen modestly to 5.9%, after falling sharply in March.”