If there was ever a sign that conditions are improving in Australia’s mining sector, it is surely found in the charts below, supplied by economists at the Commonwealth Bank.
After falling sharply from the peaks seen earlier this decade, and stabilising in 2015, job vacancies across the sector — a lead economic indicator on employment growth — are now starting to increase.
“One of the mining industry’s leading job vacancy series has been turning higher over the past few months,” said Michael Workman, senior economist at the CBA. “Most of the action is in the temporary positions while the permanent ones have been flat.”
Breaking down the the DFP Resources data, it reveals that the increase in vacancies has been led by the coal sector, likely in response to the enormous rally in spot and contract prices seen in recent months, along with those in mining services.
“The DFP index is showing rises in vacancies for the coal industry (which is mainly in Queensland and NSW), mining services, the metals sector generally (which is mainly in Queensland and WA), and oil and gas which is spread across the nation,” says Workman.
“Our reading of the trends in the mining vacancies measures from the ABS and DFP Recruitment indicate that there is some reason to be optimistic on the jobs front.
“Higher prices for oil, metals and the coals, if they continue into the first half of 2017, will give producers the higher profitability required to justify more employment.”
While the increase in vacancies, to date, has come from temporary positions, whether this translates to a lift in permanent positions will likely be determined by future movements in the Australian dollar and commodity prices, says Workman.
“Whether the permanent positions shift upwards in coming months most probably will be determined by the duration and scale of the price rises,” he says.
“Although a higher AUD/USD over the next six months may ‘complicate’ the employment decisions in the resources sector.”
Outside of the mining sector, Workman believes that “he upturn in mining-related employment will add to the generally positive trend in national vacancy numbers translating to sufficient jobs growth to keep mild downward pressure on the national unemployment rate”.