Solid labour market before COVID-19 crisis

Record public sector job vacancies
Job vacancies

Job vacancies: Job vacancies fell by just 0.1 per cent in the three months to February after lifting by 1.2 per cent in the prior quarter. Vacancies are down 2.2 per cent over the year. The number of unemployed persons per job vacancy (as per the monthly Labour force survey) stood at 3.1 in February.

Vacancies by sector: Private sector job vacancies fell by 0.5 per cent over the three months to February to 201,600 positions and were down 4.3 per cent over the year. But vacancies in the public sector rose by 2.9 per cent over the three months to February – up 18.4 per cent from a year ago with a record high 25,100 positions on offer.

In demand workers: Job vacancies in Public Administration & Safety (13,300), Education & Training (7,700) and Health Care & Social Assistance (29,800) were all at record highs in February. And vacancies in the Wholesale Trade (12,600) and Transport, Postal & Warehousing (7,500) were both at 8-year highs.

Job vacancies is a leading indicator for the job market, and therefore provides guidance on spending.

What does it all mean?

• Despite easing a little, the number of overall job vacancies remained at elevated levels in February. And the number of unemployed persons per job vacancy (as measured by the monthly Bureau of Statistics labour force survey) stood at a healthy 3.1 in February – reflecting a pretty solid labour market before the coronavirus (COVID-19) crisis hit the economy. In fact, vacancies for several industries – Public Administration & Safety, Education & Training and Health Care & Social Assistance were all at record highs by the end of February.

• That said, job ads in Retail Trade (down 5,900) fell sharply over the summer as consumer spending softened in December and January. And hiring intentions in both the Arts & Recreational Services (down 800) and the Accommodation and Food Services (up just 200) industries appeared to be adversely impacted by big city smoke hazes and the bushfire tragedy.

What do the figures show?

Job vacancies

• Job vacancies fell by just 0.1 per cent in the three months to February after lifting by 1.2 per cent in the prior three months. Vacancies are down 2.2 per cent on a year ago.

• In original terms, over the three months to February changes in vacancies across states and territories were: NSW (down 1.1 per cent); Victoria (down 0.7 per cent); Queensland (down 2.0 per cent); South Australia (up 2.6 per cent); Western Australia (up 7.4 per cent); Tasmania (down 5.6 per cent); Northern Territory (down 17.1 per cent) and ACT (down 14.3 per cent).

• Vacancies fell by 1,900 or 0.8 per cent in original terms in the three months to February. In terms of industries, 14 of the 18 industries recorded flat or higher vacancies. Vacancies rose the most in Professional, Scientific and Technical Services (up 2,600), Health Care & Social Assistance (up 1,800) and Manufacturing (up 1,300). But vacancies fell the most in Retail Trade (down 5,900) and Administrative & Support Services (down 3,300).

• In original terms, annual changes in vacancies across states and territories were: NSW (down 5.6 per cent); Victoria (down 6.9 per cent); Queensland (up 4.9 per cent); South Australia (up 24.5 per cent); Western Australia (up 0.4 per cent); Tasmania (up 13.3 per cent); Northern Territory (down 19.4 per cent) and ACT (flat).

• Vacancies fell by 5,200 or 2.2 per cent in original terms in the year to February. In terms of industries, 9 of the 18 industries recorded flat or higher vacancies. Vacancies rose the most in Wholesale Trade (up 3,200) and Public Administration & Safety (up 2,200). But vacancies fell the most in Construction (down 2,700), Accommodation & Food Services (down 2,000), Professional, Scientific & Technical Services (down 2,000), Retail Trade (down 1,900) and Administrative & Support Services (down 1,900).

• Job vacancies in Public Administration & Safety (13,300), Education & Training (7,700) and Health Care & Social Assistance (29,800) were all at record highs in February. And vacancies in Wholesale Trade (12,600) and Transport, Postal & Warehousing (7,500) were both at 8-year highs.

• By sector, private sector job vacancies fell by 0.5 per cent over the three months to February to be down by 4.3 per cent over the year. But vacancies in the public sector rose by 2.9 per cent in the three months to February to be up 18.4 per cent from a year ago to a record high 25,100 positions.

What is the importance of the economic data?

• The Australian Bureau of Statistics releases Job Vacancies data each quarter. The data is useful in gauging the strength of the job market.

What are the implications for interest rates and investors?

• Getting access to real-time jobs data at the moment is a challenge for policymakers and economists. With large swathes of the Aussie economy shutdown due to restrictive coronavirus social distancing and business lockdown measures, intra-month updates on labour market developments from the Bureau of Statistics (ABS) would be greatly welcomed. In fact, today’s released backward looking February job vacancies update is ancient history.

• Other leading indicators of the jobs market include monthly measures from ANZ, the Department of Employment and job search engine SEEK. While ANZ’s indicator includes job vacancies for March, it typically fails to capture all online advertised jobs, including portals such as LinkedIn. None of these Aussie measures of the labour market are particularly timely when compared to the weekly updates on US claims for unemployment benefits (jobless claims).

• That said, global online recruitment company, Indeed, has a presence in Australia. According to Indeed, Australian job postings were 28 per cent lower as at March 28 in trend terms than a year ago. And new job ads (less than two weeks old) were down 38 per cent over the same period.

• Despite the government’s supportive JobKeeper wage subsidy scheme, job vacancies are expected to decline over the coming months given continuing uncertainty over the longevity of the COVID-19 crisis and impact on the economy.

Published by Ryan Felsman, Senior Economist, CommSec