The pace of improvement in job advertising has slowed but the modest 0.3 per cent increase in July is still encouraging, according to the ANZ job advertisements series, Australia’s leading employment and economic activity indicator.
“When we step back and look at a range of labour demand indicators that job ads measures, we’re seeing a very gradual improvement amongst Australian business, in terms of demand for labour over 6-12 months, which is quite encouraging,” says ANZ senior economist Justin Fabo.
Job advertising is still about 6 per cent higher than it was at the end of 2013.
“The other encouraging thing is where that improvement has been: outside the resource sector, we’re seeing a clear improvement in labour demand in terms of the number of job ads in the non-mining sector.”
According to ANZ Chief Economist Warren Hogan, the July data is broadly consistent with ANZ’s view of a relatively gradual pick-up in economic activity.
“We remain cautiously optimistic on the ‘handover’ from mining to other sources of growth. Housing indicators continue to show solid momentum. House prices and auction clearance rates have picked up recently and building approvals remain elevated, suggesting there is still a substantial pipeline of work in the residential construction sector that should see activity continue to expand at a solid clip over the next year or so,” Hogan says.
“After a strong start to the year, retail sales growth has slowed in recent months, although consumer confidence has recovered after its budget-related slump, suggesting consumer spending should strengthen through the second half of 2014.
“The international backdrop is becoming more supportive, with Chinese growth improving after a soft patch earlier this year and the pick-up in growth momentum in the US is likely to benefit Australia, not least through a weaker AUD. That said, Australia’s key commodity prices remain on a downward trend and the falling terms of trade will continue to provide a medium-term headwind on growth.”
Looking forward, Fabo suggests the unemployment rate will remain around 6 per cent.
“Some people think, including the RBA, the unemployment rate will rise to 6.25 per cent. We’re not in that camp, we think the unemployment rate will top out at around 6 per cent and with a bit of luck it might start to fall several months from now,” he says.
“In the near term, we see the unemployment rate hanging around that 6 per cent mark.”
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Justin Fabo, ANZ Senior Economist Corporate & Commercial.