- Australian job vacancies hit a record high in the three months to August.
- Over the past year, openings reported by businesses surged by 19.3%. That was primarily driven by the private sector where vacancies surged by 20.3%.
- Coupled with a decline in unemployment over the same period, this indicates that labour market conditions are tightening, a necessity when it comes to building wage pressures.
The number of job vacancies at Australian businesses continued to lift in the three months to August, an outcome that will do little to dull the Reserve Bank of Australia’s (RBA) enthusiasm towards the outlook for hiring in the months ahead.
According to the Australian Bureau of Statistics (ABS), total vacancies rose by 3.4% to 240,900 in trend terms, leaving openings at the highest level on record.
“We’re still seeing growth in the quarterly trend measure of job vacancies but at a much slower rate,” said Bruce Hockman, Chief Economist at the ABS. “It’s down on the recent growth in May and also below last August, when it was 4.6%.”
Despite the moderation over the quarter, vacancies still increased by a mammoth 19.3% from 12 months earlier.
The ABS measure of vacancies is based on a survey of approximately 5,400 employers, selected from the ABS Business Register. This differs it from other measures such as job ads and skilled vacancies that use changes in advertisements placed online.
Encouragingly, openings in both the private and public sectors rose in the three months to August, lifting by 3.4% and 3.3% respectively to 220,000 and 20,900.
Over the year, vacancies in the private sector surged by 20.3%, more than double the 9.5% increase in the public sector over the same period.
And with unemployment falling over the same period, the ratio of unemployed workers to job vacancies fell to 2.96 in the quarter, the lowest level in several years.
This is a far better measure of vacancy levels given it incorporates that Australia’s labour force is now far larger than what it was in the past.
“The number of unemployed persons per job vacancy decreased further, implying job vacancies are increasing at a faster rate than the available spare capacity,” Hockman said. “This is consistent with other indicators in the labour market that are suggesting vacancies are becoming harder to fill.”
By location, vacancies rose in all states and territories except for the Northern Territory during the quarter in original terms, ranging from 3.4% growth in the ACT to 25.5% in Tasmania.
New South Wales, Victoria and Queensland — Australia’s most populous states — saw openings lift by 6.5%, 6.4% and 7.8% respectively.
Over the year, strong growth in vacancies was seen everywhere except for Queensland (+0.4%) and the Northern Territory (-2.9%), ranging from 7.6% in New South Wales to 43.3% in Tasmania.
By industry, the ABS said openings for administrative and support services workers remained the highest across the country, standing at 46,700.
Today’s report will please policymakers at the RBA who have repeatedly pointed to the vacancy report as evidence that labour market conditions are tightening leading to increased skill shortages.
“A tightening of the labour market is evident in the steady increase in job vacancies, with the number of vacancies, as a share of the labour force, at the highest level in many years,” RBA Governor Philip Lowe said in a speech in August.
That view will only be bolstered by the latest set of data.
However, while continued growth in vacancies, along with lower unemployment and underutilisation rates, suggests excess capacity in the labour force is being eaten up at a decent clip, not everyone is convinced that so much weight should be placed on the vacancy report.
“Some sectors are over-represented by a multiple of 12 to one, making it difficult to assess whether the increase will lead to continued gains in employment and a lower unemployment rate,” said Ben Jarman, Economist at JP Morgan, following the release of the previous vacancy report in May.
“The over-represented industries either have vacancies that are structurally less likely to turn into a job, or are such that a single person churns through multiple short-term opportunities.”
The large number of openings for administrative and support services workers could reflect the growing influence of the “gig economy” in Australia, largely capturing temporary rather than full-time positions.
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