Summary: Job ads up 1.9% in August; 7.8% lower than August 2022; ANZ: index showing surprising resilience; ACGB yields up noticeably; rate-rise expectations soften slightly; ANZ: buoyancy of index to fade as the economy cools; ad index-to-workforce ratio rises to 1.00.
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 plunged in April and May of 2020 as pandemic restrictions took effect but then recovered quite quickly to historically-high levels.
According to the latest ANZ-Indeed figures, total advertisements rose by 1.9% in August on a seasonally adjusted basis. The result followed a 0.7% gain and a 2.5% loss in July and June respectively. On a 12-month basis, total job advertisements were 7.8% lower than in August 2022, up from July’s revised figure of -8.7%.
“ANZ-Indeed Australian Job Ads are showing surprising resilience, rising 2.6% over the last two months,” said ANZ economist Madeline Dunk.
The figures came out on the same day as the latest Melbourne Institute Inflation Gauge figures and Commonwealth Government bond yields rose noticeably, somewhat outpacing overnight movements of US Treasury yields. By the close of business, the 3-year ACGB yield had gained 7bps to 3.79% while 10-year and 20-year yields both finished 9bps higher at 4.09% and 4.44% respectively.
In the cash futures market, expectations regarding further rate rises softened slightly. At the end of the day, contracts implied the cash rate would remain steady at the current rate of 4.07% through September, move up to 4.09% in October and then average 4.135% in November. February 2024 contracts implied a 4.155% average cash rate and May 2024 contracts implied 4.125%, around 6bps more than the current rate.
“We expect the buoyancy in ANZ-Indeed Australian Job Ads to fade as the economy cools,” Dunk added. “While the labour market remains very tight, the underemployment rate has risen from its recent low and the July Labour Force Survey showed an 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. August’s ad index-to-workforce ratio increased from 0.99 in July to 1.00 after revisions.
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.