- Australian job openings hit the highest level on record in the three months to November, according to employers.
- Over the year, vacancies recorded double-digit percentage growth across both the private and public sectors.
- The increase points to tighter labour market conditions, something that will please the RBA given that should help spur wage growth.
- Not everyone is convinced the signals from the data are reliable.
There have never been as many job openings in Australia as there are right now, according to employers.
In the three months to November, vacancies rose by 1.7% to 242,900 in trend terms, according to the ABS, leaving total openings at the highest level on record.
Vacancies in the private sector grew by 1.7% in trend terms to 242,900, outpaced by a larger increase of 2.5% in the smaller public sector.
Bjorn Jarvis, head of labour statistics at the ABS, said that while job vacancies continued to grow, the rate of growth was slowing.
“Growth in the quarterly trend measure of job vacancies eased further to 1.7%, which was down from 2.7% in August and also well below the November 2017 quarter, when it was 5.5%,” Jarvis said.
As seen in the table below from the ABS, in original terms, vacancies increased in all states and territories except for Victoria and South Australia.
Over the year, total vacancies in the private and public sectors grew by 13.9%, still a brisk pace but below the levels seen earlier in the year.
Over this period, vacancies in the private sector grew by 14.1%, slightly faster than the 12.1% lift in government openings.
Callam Pickering, APAC Economist for global job specialists Indeed, says the result points to a further tightening in labour market conditions, a favourable development when it comes to the outlook for wage pressures.
“The number of vacancies, per unemployed person, has now declined to its lowest level since 2008,” he said.
“There is currently 2.8 unemployed people per job vacancy, compared with 2.5 people in 2008.”
However, while that indicates less competition for job openings, Pickering cautions that a strong pickup in wage pressures in the period ahead in unlikely.
“While certainly an improvement, it highlights the ongoing challenge for the Australian economy: creating enough opportunities to bring unemployment and underutilisation down to an acceptable level,” he says.
“Labour market slack in Australia is still much too high and that continues to weigh upon wage growth across the nation.”
While Australian unemployment now sits at 5.1%, just above the multi-year low struck in September last year, there is still a high proportion of underutilised workers in Australia, particularly those who are underemployed.
The latter refers to those who who are already in employment but who would like to work more hours.
“Some firms are reporting a greater difficulty in finding staff,” Pickering says.
“With vacancies continuing to rise, these small pockets of tightness will hopefully become larger, encouraging businesses to offer higher wages and sweeter deals to job seekers.
“Nevertheless, the path towards higher wages will be slow and we don’t anticipate a rapid improvement this year.”
In New South Wales — not only Australia’s largest labour market but also where conditions are currently the tightest — there is currently no clear evidence that wage pressures are building, underlining the challenge facing policymakers in attempting to boost wage pressures and support household spending.
And while continued growth in vacancies points to continued strength in employment growth, the ABS series is currently significantly stronger than other measures of openings such as Seek job ads or the government’s internet vacancies index, creating doubt over the signals it is sending about hiring in the period ahead.
“While we concur that the labour market is still doing well, work we have been doing in conjunction with SEEK suggests job vacancies are likely somewhat overstated at the present time,” says Kaixin Owyong, Economist at the National Australia Bank.
“There have also been counterintuitive increases in vacancies in construction, finance and insurance, and rental, hiring and real estate services, which seem unlikely and not confirmed by trends in SEEK job vacancies.
“We’d downplay the message of this data.”
As opposed to other vacancy data that measure changes in job advertisements, the ABS series is derived from a survey of approximately 5,400 employers, selected from the ABS Business Register.
While Owyong is choosing not to read too much into the increase in the ABS series, policymakers at the RBA certainly are, regularly pointing to the ABS data to justify its optimistic assessment on outlook for labour market conditions.
That likely stems from a view expressed by RBA Deputy Governor Guy Debelle last year that rather than employers and employees connecting on traditional jobs websites such as SEEK and others, many are now interacting on other platforms such as LinkedIn and internal jobs databases, making the signals from job ads less meaningful than they were in the past.
Unless that view has changed in recent months, the RBA is likely to retain its rosy view towards labour market conditions based on today’s data.