Australian job ads lift again ahead of key wage data next week

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Australian job advertisements rose strongly in October, more than reversing a 0.7% decline in September.

According to ANZ, advertisements placed on Seek.com.au and the Department of Employment’s Australian site, Jobsearch.gov.au, rose by 1.4% to 169,577 in seasonally terms last month, leaving them 12.5% higher than a year earlier.

Source: ANZ

David Plank, Head of Australian Economics at ANZ, said that as a lead indicator on future employment growth, the result is consistent with ongoing labour market strength.

“The bounce in job advertisements in October is consistent with elevated business conditions and capacity utilisation,” he says.

While another good sign on the outlook for hiring levels, Plank says a moderation in the survey’s trend series points to the likelihood that employment growth will slow from the levels seen in recent months.

“The slight slowing in the month-on-month trend growth since August supports our view that employment growth is likely to moderate a touch after this extraordinary period of strength,” he says.

“We also note that the official employment data appears to overshot the level implied by ANZ job advertisements.”

In trend terms, job ads increase by 0.5% in October from 0.7% in September, leaving the increase on a year earlier slightly weaker at 12.2%.

Following the release of ANZ’s data series, attention will now turn to Australia’s official labour market report for October that will be released on Thursday, November 16.

According to the Australian Bureau of Statistics (ABS), employment rose by 19,800 in September in seasonally adjusted terms, leaving the increase over the year at 371,500 workers.

The strong lift in employment, the fastest seen in many years, saw Australia’s unemployment rate fall to 5.5%, the lowest level since February 2013.

Adding extra importance to the October jobs report, it will come just one day after the release of Australia’s September quarter wage price index on Wednesday, November 15.

While it’s likely to accelerate modestly following the unusually-large 3.3% increase in Australia’s minimum wage rate at the start of the quarter, ANZ will be watching this release for any signs that underlying wage pressures are building.

“Even as the labour market strengthens, with the unemployment rate falling to a four-year low of 5.5% in September, solid growth in nominal wages continues to remain elusive,” says Plank.

“The experiences of other advanced economies that are at or close to levels of full employment suggest that global factors are keeping nominal wage growth low.

“Even so, we think it reasonable to expect some upward pressure on wages as the labour market tightens, given some evidence that sectors experiencing stronger labour demand have stronger growth in average weekly wages,” he adds.

Previously, annual growth in Australian hourly wage rates held steady at a record-low 1.9% for a fourth consecutive quarter. Private-sector wages, employing the vast majority of the Australian workers, grew by just 1.78%, the slowest pace on record.

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