Summary: Job ads down 1.1% in July; 15.6% higher than same month in 2021; may be past peak but jobless rate still expected to fall; 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 decreased by 1.1% in July on a seasonally adjusted basis. The fall followed a 0.4% increase in June and a 0.6% rise in May after revisions. On a 12-month basis, total job advertisements were 15.6% higher than in July 2021, down from June’s revised figure of 16.7%.
ANZ senior economist Catherine Birch said the fall may be “a signal that we may be past the peak.” However, she also said ANZ “does not think that will translate immediately into rising unemployment and underemployment” and that “we now forecast unemployment to fall below 3% by early-2023.”
The figures were released on the same day as the latest reading of the Westpac-Melbourne Institute Inflation Gauge and Commonwealth Government bond yields generally increased. By the close of business, the 3-year ACGB yield had gained 6bps to 2.83%, the 10-year yield had added 4bps to 3.12% while the 20-year yield finished unchanged at 3.43%.
In the cash futures market, expectations of higher rates hardened with respect to the remainder of 2022 but remained largely unchanged for 2023. At the end of the day, contracts implied the cash rate would rise from the current rate of 1.31% to 1.76% in August and then increase to 2.13% by September. November contracts implied a 2.82% cash rate and May 2023 contracts implied 3.27%.
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. July’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.