Persistent concerns surround the reliability of Australia’s official jobs report, has seen markets and policymakers alike look to alternate labour market indicators to reaffirm, and in some times question, the strength in the monthly official statistics from the ABS.
The ANZ job ads survey and skilled vacancies report from the government, among others, have all been used in one form or another, including by the RBA, to help determine the true strength of Australia’s labour market at present.
It’s an understandable approach, particularly given recent abnormalities in seasonal patterns that, along with vastly differing job market characteristics in the ABS surveys rotation groups, contributed to some wild movements in the official numbers in the second half of last year.
Job ads are hard data, so it is distinguished from the ABS release which takes responses from a small number of people to estimate labour market trends across the entire nation.
It’s clearly useful and, looking at the trends in the charts below, perhaps a better overall gauge of Australian labour market conditions right now.
All of the charts come from David de Garis and Tapas Strickland, members of the NAB’s economic team, using data from the Seek Employment Marketplace report, an alternate labour market indicator that is released on the same day as the ABS jobs report.
The first tracks Australia’s unemployment rate to the number of job applications received for each advertisement placed on Seek’s website.
As it reveals, there’s a reasonable relationship between the number of applications per advertisement and the official unemployment rate.
As unemployment falls, the number of job seekers generally falls too, leading to fewer applications per advertisement than when unemployment levels are rising.
Stronger labour market conditions often see the number of new job postings increase, again lowering the applications to advertisements ratio.
There’s more jobs on offer, meaning there’s more choice for potential job seekers.
Breaking the national chart into mining and non-mining states, its clear that labour market conditions in New South Wales and Victoria – those most exposed to services industries and residential construction – are far stronger than those in mining states, particularly Western Australia.
With unemployment falling and advertisements continuing to grow, the number of applications per job ad are steadily falling in New South Wales and Victoria.
Queensland, a state with large services and mining exposures, applications per job opening are largely static, fitting with the overall composition of the states economy.
However, as the state most exposed to the mining sectors fortunes, the number of applicants to advertisement in Western Australia are skyrocketing, pointing to a continued deterioration in labour market conditions.
Unemployment is increasing while the number of available openings is falling, leading to the spike in the states applicants to jobs ratio.
The chart below reinforces this point, revealing job openings in non-mining states are growing while those in mining states remain soft.
All of the trends identified in the Seek data are broadly reflective of recent economic growth figures released with non-mining states greatly outperforming their mining peers.
Given concerns over the ABS figures, reinforced last month with the bureau reporting Western Australia’s unemployment rate as the second lowest in the country behind New South Wales, don’t be surprised if the Seek release, and others, become far more influential on policy and market movements than what was the case in the past.