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.
December’s figures have been released and, after revisions, total advertisements were 2.3% lower at 167,656 (seasonally adjusted), down from November’s revised figure of 171,654. On a 12 month basis, job advertisements were 11.4% higher while November’s comparable figure was 12.0%.
ANZ Head of Australian Economics David Plank was wary of being too confident of any particular interpretation of the numbers because of the time of year. “There can be considerable volatility around this time of year, however. For this reason we are not unduly worried around the drop in December job ads. We note, for instance, that job ads fell nearly 2% in December 2016 without signalling a turn in labour market conditions.” However, he said the figures could be interpreted as the start of some sort of slowdown. “Having said this, the easing in the trend pace of job ads growth in the fourth quarter lends support to our view that we may see a slowing in employment growth over the coming months.”
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.
Bond and currency markets were mixed in their reactions. 3 year bond yields added 2bps to 2.14%, 10 year bond yields increased by 3bps from 2.65% to 2.68% but the local currency was slightly lower at around 78.20 U.S. cents.