- The RBA believes record levels of job vacancies will lead to continued employment growth, lower unemployment and a gradual pick-up in wages.
- However, not all leading labour market indicators suggest such a rosy outlook lies ahead.
- The latest Internet Vacancy Index (IVI) released by Australia’s Department of Jobs and Small Business reported that online job ads fell for a sixth consecutive month in September.
- The IVI has previously had reasonable inverse relationship to Australia’s official unemployment rate.
While the Reserve Bank of Australia (RBA) believes record levels of job vacancies will lead to continued employment growth, lower unemployment and a gradual pick-up in wages, not all leading labour market indicators suggest such a rosy outlook lies ahead.
Many are now starting to soften quite noticeably, including the latest Internet Vacancy Index (IVI) released today by Australia’s Department of Jobs and Small Business.
In September, the number of online job advertisements fell 0.6% to 179,400 — the sixth monthly decline in a row — leaving the change on a year earlier at just 1.6%.
Earlier this year, vacancies were growing at an annual pace of over 11%.
The IVI is based on a count of online job advertisements newly lodged on SEEK, CareerOne and Australian JobSearch during a particular month.
The government says it does not reflect the total number of job openings in the labour market as it does not include jobs advertised through other online job boards, employer websites, word of mouth, in newspapers, and advertisements in shop windows.
It also does not specify whether vacancies are for full-time, part-time or casual workers.
Mirroring the weakness in the headline figures presented for September, the government said openings fell in seven of the eight occupational groups monitored.
“The strongest falls for clerical and administrative workers, machinery operators and drivers, and labourers,” it said.
Similar results were also seen across the states and territories with vacancies declining in all locations except Tasmania and the ACT, among Australia’s smallest labour markets.
In contrast, openings in New South Wales, Victoria and Queensland, the most populous states, fell 0.6%, 1% and 0.5% respectively from the levels seen in August.
So with vacancies falling in each of the past six months, adding to a growing list of leading labour market indicators that have weakened in recent months, does that mean hiring will also soften, and unemployment potentially increase, in the period ahead?
Based on recent commentary, the RBA is not concerned it will.
In a speech delivered earlier this month, RBA Deputy Governor Guy Debelle said the softening in advertisements placed at traditional jobs websites could reflect that employers and workers are now using other platforms to connect.
“This, in part, reflects changes in the way that businesses recruit and workers search for jobs,” he said.
“For example, the job advertisements data capture the main online recruitment websites, but they are not picking up newer recruitment sites or the use of social media sites, such as LinkedIn, so the usefulness of this series may be declining.
“Large corporations are also maintaining ‘expression of interest’ registers on their own websites, which reduces their need to advertise to fill a vacancy.”
So rather than connecting via traditional jobs websites or, before that, newspaper ads, there’s now a variety of other forums to source jobs or workers from, meaning the signals generated from ads placed on traditional websites may not be as useful as they were in the past.
Debelle could well be right, but one has to ask whether this shift in the way employers and staff connect has suddenly come to prominence in just the past few months.
Networking, jobs portholes on company websites and LinkedIn are not exactly new forums for labour and demand to meet — they’ve been around for years.
Do they really explain the large and growing divergence between total and online job vacancies seen this year?
That question remains unanswered to this point, along with whether the recent reversal in job ads will lead to a slowdown in employment given the latter is a noted lagging economic indicator.
While there is now increasing doubt about the signals generated from traditional jobs websites, as clearly demonstrated in the chart below, in the past the IVI has had a strong inverse relationship to Australia’s unemployment rate.
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