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 also a fairly good inverse relationship between changes in Australia’s unemployment rates and changes in the RBA cash rate. Understanding the path of Australia’s unemployment rate has historically provided a reliable indicator of RBA rate changes.
February’s figures have been released and, after revisions, total advertisements were 0.3% lower at 177,284 (seasonally adjusted), down from January’s revised figure of 177,731. On a 12 month basis, total job advertisements grew by 13.3% in February while January’s comparable growth rate was 13.7%.
ANZ Head of Australian Economics David Plank viewed the latest figures in a positive light even though they were lower than January’s numbers. In his opinion, the modest fall represented a consolidation after a big jump. “Encouragingly, ANZ Job Ads have held on to their gain in January and, as such, a slight fall in February is not cause for concern. Business conditions remain elevated, job security continues to improve and capacity utilisation now sits at the highest rate since 2008. This suggests further gains in employment and ongoing inroads into the unemployment rate, at least through the first half of the year.”
The inverse relationship between job advertisements and the unemployment rate is quite strong (see below chart). An increasing number of job advertisements as a proportion of the labour force should lead to lower unemployment rates in the near-future.