The eighth consecutive rise in job advertising is an encouraging sign for the closely-watched labour market, however there is still evidence that labour supply is not keeping pace with demand.
ANZ’s monthly job advertisement series saw job ads rise 1.3% in January, following a 1.8% rise in December. Job ads have now trended higher for 15 consecutive months and are up 10% over the year to January.
While this is an encouraging sign for the subdued labour market – the unemployment rate currently sits at 6.1% - ANZ’s chief economist says there is still a gap in the labour market.
“A gap between job ads and the official data remains however, most likely reflecting a higher rate of retrenchments in industries such as manufacturing and resources, which suggests that overall labour demand is struggling to keep pace with the flow of new workers into the economy,” ANZ chief economist Warren Hogan said.
Hogan also added that Australia’s unemployment story is likely to get worse before it gets better.
“We do not expect a significant change in this dynamic amidst below trend economic growth outcomes, with a further rise in the unemployment rate to 6.5% through 2015.”
While the Reserve Bank’s decision to cut the cash rate last week came after the bank decided to downgrade its forecasts for economic growth and the labour market, Hogan says one cut is not likely to provide enough support.
“The impact of a 25bp cut however is marginal in terms of growth outcomes, and the growth outlook also remains highly dependent on the path of commodity prices and the currency,” he said.
“A further easing of monetary policy is highly likely, and we expect a follow-up rate cut from the RBA
, most likely in March.”