Australia's jobs market is now more 'vulnerable' to negative shocks

(Matt King / Getty Images)
  • Monthly job ads data from ANZ shows the number of new Australian job advertisements fell in August.
  • When smoothed out for monthly volatility, ANZ said the data indicates the unemployment rate is unlikely to fall quickly from here.
  • In additions, employment growth ismore vulnerable to external risks such as political uncertainty.

The number of new jobs advertisements in Australia fell in August, according to ANZ’s monthly Job Ads index.

New jobs ads fell by 0.6% in seasonally adjusted terms to 177,241, after a 1.5% gain in July, continuing a recent patter of monthly volatility.

The latest job ads print — a leading indicator of labour market strength — follows July employment data from the ABS which missed expectations last month.

Total employment fell by 3,900 (+15,000 forecast), although a decline in labour force participation saw the unemployment rate tick lower to 5.4%.

But according to ANZ’s David Plank, the latest Job Ads data indicates the unemployment rate is unlikely to fall further.

“The level of ANZ Job Ads is still consistent with further growth in employment,” Plank said.

“However, job ads are no longer pointing to a further decline in the unemployment rate.”

Source: ANZ Bank

The latest data is somewhat at odds with recent measures of capacity utilisation, which suggest that further labour market tightening may still occur.

But on balance, Plank said leading indicators suggest any further downward pressure on the unemployment rate will be slow at best.

“If we bring all the different indicators together then our conclusion is that a lower unemployment rate is more likely than not, but the improvement from this point will be gradual,” he said.

That assessment is in line with the latest forecasts from the RBA, which showed the central bank expects unemployment to hold at 5.5% through to the end of 2018.

When smoothed out for monthly volatility, Plank said the Job Ads index in 2018 reflects that some heat has come out of the labour market, following record jobs growth in 2017.

Combined with stubbornly high levels of underemployment (those with a job who would like to work more hours), it suggests catalysts for higher wage growth in Australia are still missing.

“On a more negative note, the loss of momentum makes the economy more vulnerable to negative developments, with heightened political uncertainty one of the possible candidates,” Plank said.

ANZ compiles its monthly job ads data based on information from two employment websites — seek.com.au and the Australian government’s jobsearch.gov.au.

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