Summary: Job ads up 1.4% in May; 18.4% higher than same month in 2021; labour demand still outpacing supply; suggests underutilisation will keep falling; ads-to-workforce ratio steady at 1.7%.
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.
According to the latest ANZ figures, total advertisements increased by 1.4% in June on a seasonally adjusted basis. The rise followed a 1.0% increase in May and a 1.7% fall in April after revisions. On a 12-month basis, total job advertisements were 18.4% higher than in June 2021, up from May’s revised figure of 17.4%.
“Growth in demand for labour is still outpacing supply,” said ANZ senior economist Catherine Birch.
The figures were released on the same day as several other domestic data reports and Commonwealth Government bond yields fell modestly. By the close of business, the 3-year ACGB yield had shed 4bps to 3.16%, the 10-year yield had lost 3bps to 3.62% while the 20-year yield finished 2bps lower at 3.84%.
In the cash futures market, expectations of higher rates eased a little. At the end of the day, contracts implied the cash rate would rise from the current rate of 0.81% to 1.185% in July and then increase to 1.655% by August. November contracts implied a 2.74% cash rate and May 2023 contracts implied 3.54%.
Birch added “the sheer volume of unmet labour demand suggests underutilisation will keep falling and stay low” despite higher inflation rates and higher interest rates.” She expects a “very tight labour market” to keep the Australian economy “resilient”.
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 rising number of job advertisements as a proportion of the labour force is suggestive of lower unemployment rates in the near future while a falling ratio suggests higher unemployment rates will follow. June’s ads-to-workforce ratio remained unchanged at 1.7%.
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.