ANZ’s job advertisement survey is well-known as a leading indicator of employment numbers in Australia. It reflects changes in demand for labour and it provides another measure of activity in the economy. There is a fairly good inverse relationship between changes in Australia’s unemployment rates and changes in the RBA cash rate. Having an understanding of where Australia’s unemployment rate is headed therefore provides clues as to future RBA rate changes.
Figures for May have been released and, after revisions, total advertisements were 0.4% higher, down from April’s revised growth rate of 1.5%. Year-on-year growth fell back to 7.4% from 10.1%, but it is still higher than March’s 7.0% growth rate.
ANZ’s David Plank said surveys such as ANZ’s suggest Australia’s unemployment rate is likely to fall further this year. “In our view the unemployment rate is likely to edge downwards over the rest of the year, as official data catches up and matches the forward looking indicators.” However, the ANZ economist is wary of spare capacity in the economy and thinks a lower unemployment rate is not necessarily assured. “That being said, risks remain. In particular, given the level of spare capacity in the labour market, it is possible that additional demand for labour may be met by increasing the hours of part-time workers, which could keep the unemployment rate from falling.”
Local markets were unperturbed by the figures and bond yields finished the day generally a little lower. 3 year yields were steady at 1.70% while 10 year yields slipped 2bps from 2.44% to 2.42%. The local currency rose nearly 0.5 U.S cents to around 74.75 US cents.