Job ads “more resilient” but “sizable” job losses still expected

Summary:  Job ads down 2.5% in August; 78.9% higher than same month in 2020; more resilient this time around; “sizeable employment losses in locked-down areas” expected in coming months.

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. Total monthly advertising is now at highest level since late 2008.

According to the latest ANZ figures, total advertisements decreased by 2.5% in August on a seasonally-adjusted basis. The fall followed a 1.3% decline in July and a 1.3% gain in June after revisions. On a 12-month basis, total job advertisements were 78.9% higher than in August 2020, down from July’s comparable figure of 97.4%.

ANZ senior economist Catherine Birch said job advertising had been “more resilient this time around”, pointing to a 3.7% fall over July and August compared with last year’s massive drop during the national lockdown. However, she also expects further declines in coming months with “sizeable employment losses in locked-down areas”.  

The figures were released on the same day as the Melbourne Institute’s latest reading of its
Inflation Gauge
and Commonwealth Government bond yields rose by increasing amounts along the curve. By the close of business, the 3-year ACGB yield had inched up 1bp to 0.30%, the 10-year yield had added 3bps to 1.24% and the 20-year yield had gained 5bps to 1.89%.

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. A falling ratio suggests higher unemployment rates will follow.

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.

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