Job ads up in October, recovers Sep quarter falls

Summary:  Job ads up 5.6% in October; 56.0% higher than same month in 2020; October ads back to June 2020 peak; ads-to-workforce ratio slightly higher at 1.5%.

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 6.2% in October on a seasonally-adjusted basis. The fall followed declines of 2.8% and 2.1% in September and August respectively after revisions. On a 12-month basis, total job advertisements were 56.0% higher than in October 2020, modestly lower than September’s revised figure of 60.6%.

ANZ senior economist Catherine Birch noted the latest figure “put it back on par with the June peak prior to the Delta lockdowns.”

Commonwealth Government bond yields fell noticeably on the day, partially reversing large rises from the latter part of the previous week. By the close of business, the 3-year ACGB yield had lost 21bps to 1.19%, the 10-year yield had shed 19bps to 1.93% while the 20-year yield finished 18bps lower at 2.45%.

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.

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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