Employment growth is the natural antidote to the crash in consumer confidence since the May federal budget.
That’s because the more Australians who get jobs, stay in jobs and are employed, the more income is flowing to households.
So it is really good news that the ANZ Job Ads for June, released this morning, showed a bounce of 4.3% month on month.
This retraced part of last months fall of 5.6% and ANZ Chief Economist Warren Hogan was fairly upbeat:
Despite this recent softness, job ads are still 6% higher than at the start of the year, suggesting labour demand has very gradually improved. ANZ’s view is that this improvement should continue to flow into moderate employment growth going forward, although we are unlikely to experience the strong rate of growth in employment seen in Q1.
Hogan also noted the increased level of uncertainty in the economy.
However, if employment follows Ads, as it should, and the unemployment rate falls, as this relationship suggests, then consumer confidence should improve.