- The number of job vacancies fell in Australian by nearly 2% over the quarter — the second consecutive and substantial quarterly decline – according to the latest ABS figures.
- That shows “labour market conditions in Australia are deteriorating,” Indeed APAC economist Callam Pickering said in a note on the data.
- While job creation remains strong, it’s being outpaced by a record high participation rate – the proportion of workers and job hunters in Australia – making the job market more competitive.
- The figures will place more pressure on the Reserve Bank of Australia (RBA) to cut the official interest rate when it convenes on Tuesday next week.
The national labour market has started to wobble a little as the number of job openings declined substantially for the second quarter in a row, according to new data from the Australian Bureau of Statistics (ABS).
Vacancies fell 1.9% this quarter, after a 1.7% fall in the previous one, as conditions appear to be “deteriorating”, according to job site Indeed’s Asia-Pacific economist Callam Pickering.
“Fewer roles are available across the country, pointing to a slowdown in job creation and employment growth,” Pickering said in a note issued to Business Insider Australia.
“Falling vacancies typically coincides with an increase in the unemployment rate. The unemployment rate is likely to drift higher in the near-term, towards 5.5%, on the back of lower job creation.”
To be fair, those declines in vacancies have come off a very high level, but consecutive declines are concerning. Despite job creation remaining strong, adding 63,900 jobs over the quarter, it’s being outpaced by a record-high number of both workers and job-hunters, making it even harder to get a pay rise.
“The number of unemployed people per vacancy jumped to 3 in August. That’s up from 2.7 just six months ago. Include those considered underemployed and that jumps to 8. That is a lot of people competing for relatively few opportunities,” Pickering said. “Is it any wonder that wage growth remains so persistently weak?”
That’s been driven particularly by an apparent slowdown in the two states that have previously propped up the national jobs figures: New South Wales and Victoria.
“These states have driven a majority of employment growth in recent years and any slowdown in these states could cause a spike in the unemployment rate,” Pickering said.
Those figures came out on the same day as other labour force data, which shows which industries are growing or shrinking.
“The labour market data by industry showed that the health sector accounted for close to 90% of net job gains in the quarter, with 56,100 extra workers,” CBA senior economist Kristina Clifton noted.
Education and professional services – including fields like engineering, law and accounting – also continued to grow, adding more than 20,000 jobs apiece. Manufacturing has led the decline meanwhile, dropping 37,000 jobs, as the sector comes under increasing pressure.
“Over the past year there have been heavy job losses in manufacturing. The manufacturing industry is heavily exposed to global economic conditions. A slow down in global growth and uncertainty from US‑China trade tensions is weighing on the manufacturing sector,” Clifton said.
While Clifton takes a more upbeat outlook on the job market, both CBA and Indeed expect the Reserve Bank to have no choice but to cut interest rates at its next meeting on Tuesday.
If the job market keeps declining at this pace, however, Australia will need more than just another cut.
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