Job advertisements have recorded a rise for the seventh consecutive month, however the labour market continues to remain soft by historical standards.
According to the monthly ANZ
Job Advertisement Series, job ads rose a further 1.8% in December. Job ads have now trended higher for 14 months and are up 11.4% over the year to December. However, despite the encouraging data, ANZ
’s chief economist says the labour market still needs to improve.
“The good news is that the economy continues to produce new employment opportunities. The bad news is that this has not been quite enough to counteract the flow of new workers into the economy plus the on-going loss of jobs in certain sectors,” Warren Hogan, chief economist at ANZ
“As a result labour market conditions can be described as soft which will continue to cap wage increases. Together with the recent decline in oil prices, this will feed through to relatively subdued inflation outcomes through 2015.”
Although Hogan believes the best course of cash rate action is stability at this point, he admits there is increasing scope for the Reserve Bank to cut interest rates over the first half of 2015.
“For monetary policy, the most likely course remains for the RBA
to keep rates in a holding pattern for most of 2015. However a softer inflation outlook suggests the RBA
could have a little more wriggle room than previously anticipated to support business and consumer confidence.
“We will be watching consumer confidence in the next few days as well as the official employment numbers on Thursday to ascertain the likelihood that the RBA
Board will decide at some stage in the next few months that the economy can afford further interest rate reductions to help grow the non-mining economy a little stronger than it is at present.”