The data on the Australian labour market is making no sense at all

Photo by Sean Gallup/Getty Images

It’s tough to gauge the underlying strength in Australia’s labour market right now. Nothing seems to make sense.

On one hand the ABS’ official seasonally adjusted jobs figures resemble an earthquake seismograph, gyrating wildly each and every month. On the other hand the employment subindex in the Ai Group’s Performance of Services Index (PSI) suggests that services firms shed staff last month at the fastest pace since the GFC.

And now the latest ANZ job ads survey suggests that the number of advertised positions rose solidly in August.

Confused? You’re not alone. One can only imagine what policymakers at the Reserve Bank of Australia are thinking.

According to the ANZ, job advertisements jumped by 1.8% to 160,184 last month in seasonally adjusted terms, leaving the number some 8% higher than the same month a year earlier.

Reflective of the diminishing importance of newspaper job advertisements in the data series, the ANZ did not release a breakdown between the total numbers of internet and newspaper advertisements seen during the month.

Despite the mixed nature of Australian labour market data right now, Felicity Emmett, head of Australian economics at ANZ, retains faith in the job advertisements series, noting that the August result indicates that labour market conditions continue to improve.

“The bounce in ANZ job ads in August is an encouraging sign that the improvement in labour market conditions is continuing,” says Emmett. “The rise in job ads is consistent with the ongoing strength in business conditions and increasing capacity utilisation reported in the business surveys.”

The chart below from ANZ looks at the trend in Australian job ads going back to 2001. While well below the peak seen prior to the GFC, the total number of advertisements has clearly trended higher since mid-2013.

While she believes the trend is not enough to see a rapid decline in Australia’s unemployment rate, Emmett believes that at current levels “the rate of job ads growth is consistent with employment growing at an annual pace of close to 2% y/y”.

“Overall, this is consistent with our view that the unemployment rate will slowly improve over the next year, supported by low interest rates and solid business conditions,” she says.

The internet series — now accounting for the vast bulk of total job ads in Australia — uses data from seek.com.au, along with that from the Department of Education’s Australian JobSearch site, jobsearch.gov.au. It counts the average number of ads carried by each of the sites contributing to the series on the same day of each week every month.

Though a comprehensive guide to the number of job ads in Australia each month, the data does not capture all available positions that are communicated by word of mouth, internal networks or job bulletin boards.

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