Australian job vacancies currently sit at a five-year high, according to the ABS, rising by 7.3% to 181,000 over the past 12 months.
Along with a solid increase in the ANZ job ads series over the past year, it points to the likelihood that employment growth will continue to grow modestly in the period ahead.
But where are they located, and which industries have seen vacancy levels increase?
Enter Michael Workman, senior economist at the Commonwealth Bank, with the answers.
He’s drilled into the ABS’ quarterly vacancy report released earlier today, producing some ripper charts illustrating what’s been happening in parts of the Australian labour market over the past year.
The first shows the number of vacancies by state, looking at the trend going back to when the survey was reestablished in 2009.
New South Wales and Victoria — reflective of not only having the largest population bases but also the strongest economic conditions in recent years — have seen openings grow substantially over the past two years.
However, while vacancy levels in those states are streaking ahead, Workman suggests there is tentative evidence that suggests labour market conditions are starting to improve in other parts of the country.
“The jobs vacancies trends tend to be more favourable for jobs growth in Victoria and New South Wales, but there are signs of an improvement in Queensland that may be related to stronger residential construction and higher coal prices since mid-2016,” he says.
Workman also sees a glimmer of light for the Western Australia labour market due to a rebound in commodity prices.
“Western Australia vacancies are stabilising which is positive for employment growth by mid-year,” he says. “Higher iron ore, nickel and gold prices will help lift employment in those areas over the coming year.”
The state trends are largely reflective of vacancy levels by industry sector, with growth in services outpacing those seen in other sectors of the economy.
According to the ABS data, over the past year, higher job vacancies were recorded in construction, transport, communication, finance and insurance, rental and hiring, education and health, along with culture and recreation.
While the bulk of those are linked to services, like the trends seen in individual states, Workman says that vacancy levels are picking up across the mining sector as commodity prices lift.
“Higher bulk commodity prices have lifted profitability, enabling more skilled labour to be utilised to maximise productive capacity,” he says.
“It means more direct and allied mining sector employment.”
That’s reflected in the chart below, tracking the movement in mining sector employment, vacancies and private data released by DFP Recruitment.
Though he admits that recent gains in bulk commodity prices may reverse in the year ahead, Workman says that while it should dampen favourable employment trends within the sector, it’s unlikely to reverse them.
The final charts from Workman are perhaps the most interesting, although they do not specifically relate to the vacancy report.
The first shows the percentage of total employment in Australia by specific sector, breaking down the number by full and part-time employment.
And this one shows the trend in employment growth over the past decade among the largest employing sectors in the country.
After displacing retail as the largest employer in 2008, healthcare has streaked away from the pack in terms of employment growth, now accounting for a whopping 13% of total employment.
Workman suggests that trend will continue as Australia’s population ages.
“In our view it will be the predominant sector in coming decades,” he says. “With 13% of the economy’s 12 million jobs, it is set to exceed 15% as the National Disability Insurance Scheme (NDIS) expands.”
If that’s correct, it’s clear where many of Australia’s new jobs will come from, and what skill sets will be required to fill them.
However, as is the case with the health sector where 45% of employment is part-time, Workman believes the casualisation of the workforce will likely continue given the shift towards services employment.
“It is a similar issue with the other faster growing services sectors like professional services (accounting, legal and property), accommodation, cafes and restaurants,” he says. “They tend to have a much higher proportion of part-time jobs than the economy-wide average of 32%.”
That will present a challenge to policymakers given many believe it contributed to record-low wage growth and tepid household consumption levels over the course of 2016.