Summary: Job ads down 1.0% in March; 10.6% lower than March 2023; ANZ: pace of declines eases; ACGB yields rise noticeably; rate-cut expectations soften; ANZ: recent stickiness in series suggests gradual rise in jobless rate; ad index-to-workforce ratio declines.
From mid-2017 onwards, year-on-year growth rates in the total number of Australian job advertisements consistently exceeded 10%. That was until mid-2018 when the annual growth rate fell back markedly. 2019 was notable for its reduced employment advertising and this trend continued into the first quarter of 2020. Advertising then plunged in April and May of 2020 as pandemic restrictions took effect but recovered quite quickly, reaching historically-high levels in 2022.
According to the latest reading of the ANZ-Indeed Job Ads Index, total job advertisements in March declined by 1.0% on a seasonally adjusted basis. The index fell from 133.5 in February after revisions to 132.1, following a loss of 2.1% in February and a gain of 3.2% in January. On a 12-month basis, total job advertisements were 10.6% lower than in March 2023, up from February’s revised figure of -11.8%.
“The pace of declines in ANZ-Indeed Job Ads has eased,” said ANZ economist Madeline Dunk. “In fact, there was no change in the average number of Job Ads in Q1 2024 compared to Q4 2023.”
The update was released on the same day as the Melbourne Institute’s latest Inflation Gauge reading and Commonwealth Government bond yields rose noticeably across the curve, largely in line with overnight rises of US Treasury yields. By the close of business, the 3-year ACGB yield had gained 7bps to 3.62% while 10-year and 20-year yields finished 10ps higher at 4.08% and 4.38% respectively.
In the cash futures market, expectations regarding rate cuts later this year softened. At the end of the day, contracts implied the cash rate would remain close to the current rate for the next few months and average 4.305% through May and 4.29% in June. However, August contracts implied a 4.20% average cash rate, November contracts implied 4.03%, while February contract implied 3.865%, 46bps less than the current rate.
“While we expect to see a further moderation in Job Ads, the recent stickiness in the series implies it is unlikely to be a linear path downward and suggests we will only see a gradual rise in unemployment,” Dunk added. “Indeed, while ABS job vacancies fell 6.1% quarter-on quarter in February and 23.5% since the May 2022 peak, there hasn’t been a corresponding increase in the unemployment rate.”
The inverse relationship between job advertisements and the unemployment rate has been quite strong (see below chart), although ANZ themselves called the relationship between the two series into question in early 2019. A higher job advertisement index as a proportion of the labour force is suggestive of lower unemployment rates in the near future while a lower ratio suggests higher unemployment rates will follow. March’s ad index-to-workforce ratio declined from 0.91 after revisions to 0.90.
In 2008/2009, advertisements plummeted and Australia’s unemployment rate jumped from 4% to nearly 6% over a period of 15 months. When a more dramatic fall in advertisements took place in April 2020, the unemployment rate responded much more quickly.