Labour market in holding pattern as no sign (yet) of jobs slump

The start of the new calendar year has the recruitment industry engaging in its annual guessing game of what the year ahead might bring.

The last two years produced bumper results for most of the industry as vacancies soared and many employers, including governments, struggled to effectively respond to the significant shift in the balance of power across the labour market.

The current mood among Australian business leaders could best be described as cautious, if not pessimistic.

The news has been more mixed in the recruitment and the labour market.

Local market leader Hays released its December 2022 quarter update yesterday with some sobering news.

Across Australia and New Zealand temp net fees dropped 4% and perm fees slipped 1%. Australia as a whole recorded a 6% drop in net fees (permanent placement fees plus net temporary margin).

On a state-by-state basis, New South Wales and Victoria, which together represent 52% of Australia fees, decreased by 3% and 12% respectively. Queensland fell by 3%, the ACT by 16% while Western Australia was flat.

By specialism, construction, and property, representing 20% of ANZ fees, increased by 4%. Technology, the second largest specialism, was flat, and Accountancy & Finance increased by 15%. Sales & Marketing declined by 10%, with HR down 11%.

For the equivalent quarter Robert Walters Australia reported a 3% net fee decline, and Page Group (Michael Page) a flat result.

The official data, lagging the listed company results by about six weeks, has yet to reveal any signs of deterioration in the local labour market.

The most recent ABS labour market data, for November 2022 (collected in the first two weeks of the month) was largely flat, in seasonally adjusted terms.

• Unemployment remained at 3.4%
• Total employment rose 0.2% to reach another new high with both full time employment (+26,400) and part time employment (+6,300) both rising
• The participation rate stayed at 66.7%

There was a shift in the dynamic of the November 2022 vacancy report with the slight decline (4.9%) in vacancies contrasting with the rise in the number of Australian employers reporting at least one vacancy (27.7%) which was a new record high, up from 26.7% in August (graph, above).

Private sector vacancies in Australia were down 6% while public sector employer vacancies were up by 6%.

The drop in vacancies was almost entirely due to the almost halving of the number of employers (33.4% to 17.5%) in Australia’s largest employing sector, health care and social assistance, reporting at least one vacancy.

The Australian Internet Vacancy Index (IVI) reported no change in December, compared to the November result.

Two days ago international recruiter, Robert Half, released the results of a recent survey of over 300 respondents that revealed that 36% of Australian employers are expecting to increase their permanent headcount this year, with another 39% planning to maintain headcount at its current level.

This result mirrors the official data with the Jobs and Skills Australia data for November reporting that 30% of Australian employers were expecting to increase staffing levels over the next three months.

The recruitment difficulty rate remained high decreasing by just 1 percentage point to 69% of recruiting employers in November 2022; 6 percentage points below the peak of 75% recorded in July 2022.

In the United States, the recent labour market data largely mirrors the stability in Australia with the US unemployment rate improving to 3.5% in December from 3.6% in November, on the back of a 223,000 rise in nonfarm employment.

The US labour market quit rate in November (2.7%) was higher than in October (2.6%), and significantly, marks the first time since March 2022 that the quit rate rose.

The current quarter also looks like being another good one for US hiring with the ManpowerGroup quarterly net employment outlook (based on a survey of 6,000 US employers) at 29%, down 4% from last quarter (the net employment outlook is calculated by subtracting the percentage of employers who anticipate reductions in staff from those who plan to hire).

Given how unpredictable significant recent global events have proven to be it is a fool’s errand attempting to predict the future however at the moment there are no signs that the demand for labour will decline significantly any time soon.

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