Job advertisements has risen for the ninth consecutive month in February, although the number of jobs continues to fall short of population growth, suggesting unemployment is expected to get worse before it gets better.
Job advertisements rose 0.9% in February and are up 10.2% over the year to February, according to the ANZ Job Advertisement Series. However, ANZ chief economist Warren Hogan says labour supply is still struggling to keep up with demand.
“…[W]hile job ads did experience their ninth consecutive monthly increase, the annual pace of growth has eased somewhat in the previous two months, suggesting some loss of momentum,” he said.
“In addition, growth in new labour demand appears to be occurring in tandem with job losses in certain sectors such as manufacturing and mining. As such, aggregate employment outcomes continue to fall short of population growth, with the unemployment rate edging up.”
According to Hogan, this is a trend we are likely to see continue through much of the year. Whilst ANZ is forecasting another cash rate cut when the Reserve Bank meets in April, Hogan says this trend may give the central bank ammo for a third rate cut later in the year.
“After commencing a fresh easing cycle in February, the decision by the RBA
to keep policy on hold last week is somewhat perplexing. This is particularly the case given the RBA has indicated that the transmission mechanism of monetary policy is muted at present, and that one 25bp cut in isolation will have limited economic impact,” he said.
“We will be watching consumer confidence data in the next few days, as well as the official employment figures on Thursday, to determine the likelihood that the RBA will cut again next month as we expect. There is also some possibility that a third cut will become appropriate later in the year, should confidence and indicators of non-mining investment and household consumption fail to turn up sufficiently.”