- The labour market appears as if it is running out of steam after a roaring recovery saw job vacancies boom.
- Job ads, typically a forward indicator of employment growth, are up more than 45% on pre-pandemic levels, Indeed figures show.
- However, vacancy numbers have made no progress whatsoever in the last month, suggesting that there is little room to go higher, at the same time that lockdowns begin to bite.
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The miraculous national recovery is beginning to hit turbulence, as the expanding labour market appears to reach its limit and lockdowns take hold.
Indeed’s latest numbers show the boom in Australian jobs may have found a ceiling, as vacancies begin to plateau for the second month in a row.
Job ads are now 45.7% higher than they were prior to the pandemic, as easy money and fiscal stimulus have helped put Australia’s economy on track to post record year-on-year growth.
While impressive, the labour market has made no progress since the end of May, with ads in mid-June actually slightly lower now than they were two weeks prior.
More troubling is what impact lockdowns are having, with Victoria’s economy having trailed other state economies into this year, dragging back the national revery as a result.
Indeed Asia-Pacific economist Callam Pickering told Business Insider Australia that “short-term lockdowns have had no meaningful impact on hiring behaviour”, but acknowledged that longer ones did come with a cost.
“Victoria’s fourth lockdown may have had a modest impact on hiring but we expect that impact to quickly shift as restrictions are lifted,” Pickering said earlier this week.
Those comments however, much like the figures themselves, pre-date the latest outbreak that has spread from Bondi out into other parts of Sydney, with two new cases having now been identified in Victoria with the Delta strain.
While it is too early to tell how big the current outbreak will grow to or how long Sydney’s lockdown will last, it does further undermine a recovery that appears to have already found its top speed.
Lockdowns aside, the fundamentals of the Australian economy look strong, with Pickering anticipating the labour market to continue to tighten.
“Competition remains fierce across the nation, with risks of near-term skill-shortages emerging now that the unemployment rate has hit 5.1%,” he said. “Businesses are pretty confident about the economic outlook and their future prospects and they are hiring accordingly.”
Separate ABS data shows that more than one in four businesses can’t find workers right now, suggesting skill shortages are becoming far more pronounced.
“The longer these hiring trends persist, the greater the likelihood that it translates into stronger wage growth, particularly in those areas where demand is strongest. Strong wage growth has been the missing piece in Australia’s economic puzzle for the past eight years and we are inching closer to changing that,” Pickering said.
Certainly it is the hope of the Reserve Bank, which has reaffirmed it will keep interest rates low to keep heat in the economy for “at least” a few years. While major bank economists challenge that assumption, it too is based on the premise that wage growth and full employment are coming.
Further virus outbreaks could certainly threaten that, shaking some of the confidence that has been returned to businesses and consumers. Early reports on Friday suggest Sydney’s hospitality sector could write off $260 million from the first week of lockdowns alone, while tourism figures suggest current border closures could cost billions more.
If there is a silver lining to be found in the figures however, it is that New South Wales has so far proved to be not only the most resilient state but also has the most spare capacity currently of any state.
Indeed figures show hiring is 54.5% stronger in the state than before the pandemic, and the only one north of 50%. Western Australia and Queensland are the next stronger performers.
Much of that result could be attributed to the First State’s careful management of the virus, one that has both been successful in containing outbreaks but also in only selectively employing hardline restrictions.
This may now face its most difficult test yet.