Australian job advertisements rose for a sixth consecutive month in August, adding to recent evidence that labour market conditions are continuing to strengthen.
According to ANZ, total advertisements increased by 2% to 181,435 in seasonally adjusted terms, leaving them up 13.3% on the levels of a year earlier.
As seen in this chart below, not only have the level of advertisements increased over the past six months, the pace of growth also appears to be accelerating.
David Plank, head of Australian economics at ANZ, said the result fits with robust business conditions seen in recent months, pointing to the likelihood that hiring levels will remain firm in the latter parts of the year.
“Job advertisements continue their period of strength, consistent with robust business conditions,” he said following the release of the August report.
“Together with other forward indicators and survey-based measures, this strength suggests some downside risk to the unemployment rate in the near term, with employment expected to rise in the order of 15–20,000 per month over the period ahead.”
Australia’s unemployment rate currently sits at 5.6%.
Should labour market participation hold around 65.1% — it’s current level — hiring of the magnitude alluded to by Plank would see unemployment edge lower in the months ahead.
While he says that today’s result will please the Reserve Bank of Australia (RBA), removing some of the downside risks on the outlook for household spending and wage growth, Plank remains cautious on the longer-term prospects for the household sector and the broader Australian economy.
“We do not expect consumption growth to be particularly weak in Q2 given the increase in household disposable income from additional hours worked. Additionally, the higher than usual increase in the minimum wage will likely provide some support to spending in Q3,” he says.
“That said, given the elevated levels of existing household debt and already low savings rate, we find it difficult to envision a sustained increase in consumption growth without some pickup in wage growth and consumer confidence.
“This will act as a constraint on the acceleration in GDP growth even as business investment picks-up.”
Markets will get further clarification on the performance of the economy — including household consumption — when the ABS releases Australia’s June quarter GDP report on Wednesday, September 6.