Australian job ads just recorded the largest surge in years

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The number of job advertisements in Australia spiked sharply in January, suggesting that the strength in hiring seen in 2017 will continue in the months ahead.

According to ANZ Bank, total advertisements surged by 6.2% to 177,961 last month in seasonally adjusted terms, the largest percentage increase since February 2010.

While a stellar result, the sharp increase followed a 2.7% decline in December.

So part of January’s surge reflects prior weakness in advertisements seen a month earlier.

Still, reflecting just how much labour market conditions have improved this year, January’s figure was up an impressive 13.8% from January 2017.

Source: ANZ

“It is encouraging to see a strong recovery in Job Ads last month after a slight retreat in December,” said David Plank, Head of Australian Economics at ANZ Bank.

“The bounce in January is in line with ongoing strength in business conditions, capacity utilisation and other surveys of employment conditions.”

Given those trends, Plank says there is “some evidence that the slowdown in [advertisements seen] in the second half of last year may reverse in the coming months,” although he admits that given seasonal volatility at this time of year, “it is perhaps too early to tell for sure”.

While strength in advertisements usually bodes well on the outlook for employment growth, Plank says the key question that remains is whether strong labour market conditions will translate to a pickup in wage pressures.

He thinks it will.

“We see a quarterly rise of 0.5% as being consistent with our view that the RBA will raise rates this year in an effort to bring the real cash rate back to zero,” he says.

The Australian Bureau of Statistics (ABS) will release Australia’s December quarter wage price index (WPI) on February 21.

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