Weakest growth in skilled job vacancies in 5 years
Skilled Job Vacancies
Skilled job vacancies: In trend terms, the Internet Vacancy Index (IVI) fell by 1.6 per cent to 81.2 points in April after falling by 1.8 per cent in March (the biggest fall in six years). The index is 5.9 per cent lower than a year ago – the weakest annual growth rate since December 2013.
The internet job vacancies data is a leading indicator of the job market and therefore important for consumer-focussed stocks and companies.
What does it all mean?
• Australia has experienced a stellar run of job growth over the past few years. Over 820,000 jobs have been added since the Reserve Bank last cut interest rates back in August 2016. And job losses have only occurred in only one month (-800 in July 2018) since September 2016.
• The trend unemployment rate in NSW is currently at record lows of 4.3 per cent. Victoria’s unemployment rate fell to historic lows of 4.2 per cent in seasonally adjusted terms in December. Unemployment rates in both territories – ACT (3.9 per cent) and Northern Territory (4.5 per cent) – remain low. But the national trend unemployment rate has ticked up to 5.2 per cent, above the Reserve Bank’s long-run forecast of 5 per cent. And underemployment and underutilisation rates have started to lift again, reflecting spare capacity in the labour market.
• Now leading indicators of employment growth such as job advertisements and vacancies are weakening. In fact, the government’s skilled internet job vacancies index grew at its weakest annual pace in five years in April.
• One could point to seasonality, given the surge in part time job creation during the month. An extended Easter-Anzac Day holiday period in April may have boosted retail and hospitality-related jobs. While the Federal election campaign, held on May 18, will have created many temporary positions at the Australian Electoral Commission. But vacancies had already weakened by the most in six years in March, suggesting the downward trend was already in place. And skilled internet vacancies are falling in the most populous states of NSW, Victoria and Queensland.
What do the figures show?
• The Department of Jobs and Small Business Internet Vacancy Index fell by 1.6 per cent to 81.2 points in April – a 23-month low.
• It was the fourth consecutive monthly decline and the index was revised down in March to 82.5 points or a decline of 1.8 per cent (previously reported as down by 1.5 per cent) – the biggest fall in six years. The index is 5.9 per cent lower than a year ago, but is still up by 16.4 per cent on the level recorded in April 2014.
• Decreases in job advertisements were recorded all eight occupational groups in April with the strongest declines recorded for Labourers (down 2.2 per cent), Machinery Operators and Drivers (down 2.0 per cent) and Technicians and Trades Workers (down 1.9 per cent). Declines also occurred in Clerical and Administrative Workers (down 1.8 per cent), Sales Workers (down 1.6 per cent), Managers (down 1.2 per cent), Professionals (down 0.8 per cent) and Community and Personal Service Workers (down 0.7 per cent).
• Over the year to April 2019, job advertisements fell in six occupational groups. The strongest falls were recorded for Machinery Operators and Drivers (down 18.3 per cent), Labourers (down 14.8 per cent) and Sales Workers (down 12.5 per cent). Declines also occurred in Technicians and Trades Workers (down 9.5 per cent), Managers (down 7.0 per cent) and Clerical and Administrative Workers (down 6.0 per cent). But increases were recorded for Community and Personal Service Workers (up 3.7 per cent) and Professionals (up 1.2 per cent).
• Over the year to April 2019, the largest increases in job advertisements at a more detailed occupational level were recorded for Health and Welfare Support Workers (up 26.6 per cent), Health Diagnostic and Therapy Professionals (up 21.0 per cent), Medical Practitioners and Nurses (up 16.4 per cent), Legal, Social and Welfare Professionals (up 8.4 per cent) and Carers and Aides (up 7.3 per cent).
• The largest decreases in job advertisements at the detailed occupational level were recorded for Other Labourers (down 20.6 per cent), Drivers and Store persons (down 20.4 per cent), Sales Assistants and Salespersons (down 11.8 per cent), Corporate Managers (down 8.9 per cent) and General-Inquiry Clerks, Call Centre Workers, and Receptionists (down 6.4 per cent).
• Job vacancies decreased in seven states and territories in April: Tasmania (down 2.3 per cent); Northern Territory (down 2.1 per cent); Victoria (down 2.0 per cent); NSW (down 1.7 per cent); Queensland (down 1.0 per cent); South Australia (down 0.7 per cent) and Western Australia (down 0.6 per cent). But vacancies lifted in the ACT by 0.8 per cent.
• Over the year to April, job vacancies rose in two of the states and territories: Tasmania (up 11.3 per cent) and ACT (up 7.8 per cent). Vacancies fell in Northern Territory (down 9.8 per cent); NSW (down 8.5 per cent); Queensland (down 5.3 per cent); Victoria (down 4.8 per cent); South Australia (down 2.3 per cent); and Western Australia (down 0.8 per cent).
What is the importance of the economic data?
• The Department of Jobs and Small Business releases a monthly Internet Vacancy Index. The index is based on a count of online job advertisements newly lodged on three main job boards (SEEK, CareerOne and Australian JobSearch) during the month. The index is the only publicly available source of detailed data for online vacancies, including around 350 occupations (at all skill levels), as well as for all states/territories and 37 regions.
What are the implications for interest rates and investors?
• With key labour market indicators softening and unemployment rates ‘stuck’ at around 6 per cent in Tasmania, Queensland, Western Australia and South Australia, the Reserve Bank appears likely to pull the interest rate lever at its June 4 meeting.
• The Reserve Bank now believes that an unemployment rate of well below 5 per cent (probably 4 per cent or lower) is needed to boost wages and stoke inflation. But Reserve Bank Governor Philip Lowe acknowledged yesterday that “The labour market has surprised on the upside over recent times, and it could do so again. While we can’t rule out this possibility, the recent flow of data makes it seem less likely.” Given that Australia needs to “do better than this” in getting unemployment and underemployment rates much lower, monetary and fiscal policy support is necessary. Of course, productivity-boosting reforms and policies which foster and encourage business spending, hiring, entrepreneurialism and innovation are necessary for a modern Australia.
• But it’s not all ‘doom and gloom’. Skilled job vacancies remain elevated across an array of occupations. The National Disability Insurance Scheme (NDIS) and ageing population are creating skills shortages in the health services sector. The pace of digital change is supporting employer demand for information professionals. Teachers and farmers are highly sought after in regional areas.
• CommSec expects interest rates to be cut at the Reserve Bank Board’s June and August meetings. The Reserve Bank believes that the economy can grow faster (and unemployment can fall further) without causing an inflation break-out.
Published by Ryan Felsman, Senior Economist (Author) CommSec