Australia's stellar employment growth looks like it'll slow in the months ahead

Photo by Joe Raedle/Newsmakers

The number of Australian job advertisements continued to grow last month, pointing to continued strength in labour market conditions in the months ahead.

According to the ANZ job ads survey, new postings increased by 1% to 156,969 in January.

Online postings, now the dominant force within the survey, rose by 1.1% to 154,285, leaving the annual gain at 10.8% after seasonal adjustments.

Newspaper advertisements, accounting for just 1.7% of all job postings, fell by 3.2% to 2,684, leaving the annual decline at 13%.

According to Warren Hogan, chief economist at ANZ, the continued growth in advertisements points to the likelihood of modest employment growth in the early parts of 2016.

Job advertising continues to rise in Australia registering a 1% monthly increase in January that reverses the 0.1% m/m decline in December. The ANZ Job Ads series is up 10.8% in annual terms, confirming the broader cyclical upswing in hiring intentions that has been evident since early 2014. Of the 25 monthly readings since January 2014, only five have been a contraction.

There is some evidence in the trend numbers that job ads have lost a little momentum in the past six months. This is only an early signal and will need to be confirmed by more data. Overall we see the job ads series, in conjunction with other leading indicators of labour demand, as consistent with further moderate employment gains in early 2016, enough at least to keep the unemployment rate stable.

Despite the continued strength in advertisements, Hogan believes that the Australian economy is unlikely to create the same number of jobs this year as last, an understandable view given the economy generated employment growth of 305,000 in 2015, the second largest annual increase on record since the beginning of the millennium.

He also believes that economic uncertainties – both at home and abroad – may also slow the pace of job creation.

“Unfortunately uncertainties around the economy are mounting,” says Hogan.

“International economic and financial stability is under threat from financial stresses in China, excess capacity in major mineral resource and manufacturing industries, and a tightening of global financial conditions. Domestically the federal election may add political and policy uncertainty.”

The ANZ report comes before the release of the ABS’ official jobs report for January on Thursday, February 18.

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