Job vacancies at 5-year highs
Job vacancies: Job vacancies rose by 2.2 per cent to 182,000 in the three months to November – a 5-year high. Job vacancies are up 9 per cent on a year ago.
In terms of industries, vacancies rose the most over the year in Financial & Insurance services (up 4,000), Health Care & Social Assistance (up 3,900), Administrative & Support services (up 2,000) and Construction (up 1,700). Vacancies fell most in Wholesale trade (down 2,100), Accommodation & Food services (up 1,900), and Retail trade (down 900).
What does it all mean?
The number of job vacancies have surged in the six months to November and are now holding at 5 year highs. With more optimism on the global economy, business is shifting its focus to growth, investment and profitability. The lift in job vacancies certainly bodes well for hiring in coming months. Overall it is pretty clear that the job market remains in good shape.
Last year most of the jobs created were in part-time roles, with employers hiring more part timers and managing their workforce more carefully. The result was understandable given the degree of uncertainty that was prevalent with the Federal Budget, timing of an early election, and Brexit. However throughout the latter part of the year, employers started to add more full-timers. In fact full-time employment surged by 85,000 in October and November. Stronger profitability and a focus on growth is giving employers a degree of comfort to add full-time and permanent staff to the roster.
Interestingly there are 14,800 more vacancies than at the same time in 2015. The jobs being created are primarily in the services sector, with finance and healthcare and admin roles leading the gains. These jobs tend to be spread over a raft of small and medium-sized businesses as well as large firms, so generally don’t attract the same degree of media attention as jobs lost in mining. Importantly the lift in commodity prices should support the resources sector. It is likely that job numbers across the mining sector should bottom out and start to lift in coming months.
It is clear that an improvement in job security has been a key driver in the improvement in retail spending and housing activity. And it is also another reason why the Reserve Bank is sitting comfortably on the interest rate sidelines. On balance we expect interest rates to remain on hold over 2017. However with inflation looking likely to have bottomed, and if growth lifts over 2017 as expected the Reserve Bank may start to prepare the market for rate hikes later in 2017 or early 2018.
What do the figures show?
Job vacancies rose by 2.2 per cent to 182,000 in the three months to November – a 5 year high. Job vacancies are up 9 per cent on a year ago.
In original terms, annual changes in vacancies across states and territories were: NSW (up 15.6 per cent); Victoria (up 12.7 per cent); Queensland (up 5.3 per cent); South Australia (down 5.9 per cent); Western Australia (up 2.3 per cent); Tasmania (down 25.9 per cent); Northern Territory (up 17.4 per cent) and ACT (down 5 per cent).
Vacancies rose 15,400 in original terms over the year. In terms of industries, vacancies rose the most over the year in Financial & Insurance services (up 4,000), Health Care & Social Assistance (up 3,900), Administrative & Support services (up 2,000) and Construction (up 1,700). Vacancies fell most in Wholesale trade (down 2,100), Accommodation & Food services (up 1,900), and Retail trade (down 900).
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?
The Reserve Bank will remain on the interest rate sidelines over the majority of 2017. The job market is in decent shape, consumers and businesses remain confident, home building is just shy of record highs. The higher commodity prices and lower Australian dollar would give policymakers a further degree of confidence.
Originally published by Savanth Sebastian, Economist, CommSec