Job market shows (official and unofficial) signs of stirring

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The ABS will release the August labour market data at 11.30 a.m. today, and it’s a set of numbers that will be received with greater interest than usual.

July’s seasonally adjusted job growth of 58,000 was substantially higher than expected and 53% higher than the 38,000 monthly average across the previous twelve months of 38,000.

The participation rate also jumped, to a record high of 67.1%.

Traditional labour market thinking is that a rise in the participation rate indicates growing worker confidence as previously discouraged workers re-enter the labour market. The recent record level of immigration is more likely the reason for the participation rate jump, as immigrants’ labour market participation rate is higher than that of the local-born population.

However, other labour market indicators are all pointing in the right direction.

From official data there are two other significant positive indicators.

Tuesday’s release of the latest Recruitment Experiences and Outlook Survey (REOS) of 1000 Australian employers, conducted by Jobs and Skills Australia, showed optimism among Australian employers jumped significantly in August, with 22% forecasting they would increase headcount in the next three months, a 4 percentage point jump compared to July and the highest figure for five months.

The REOS also showed that recruitment difficulty increased month over month, with 50% of recruiting employers reporting difficulty filling at least one vacancy. This is a three-point rise from last month. Non-capital city employers reported a six-point rise in recruitment difficulty.

Recruitment activity remained broadly stable with 43% of employers recruiting for at least one vacancy during August, a one-point decline from July. The post-pandemic high point remains July 2022 when 59% of surveyed employers were, or had been, hiring during the survey month.

The REOS quarterly summary (April – June 2024) revealed employers had the most difficulty recruiting for Technicians and Trades workers (75%), while Clerical and Administrative Workers had the lowest recruitment difficulty rate at 31%. By sector, Manufacturing (63%), and Wholesale Trade (61%), reported the highest recruitment difficulty rates.

The REOS result broadly aligns with the return to growth in yesterday’s latest Internet Vacancy Index release, which showed a spike in online job advertisements during August of 10,600 job advertisements (4.8%), the most substantial monthly increase in almost three years. This result bucks the pattern of consistent declines recorded over the last 12 months.

Unofficial data has also shown positive signs for local recruiters.

Last month, Greg Savage’s blog Can You Feel The Market Rising? shared JobAdder data showing that average new jobs created per agency reached a low point in the December quarter last year (55.6). The most recent two quarters (March and June) both showed a rise (58.2 and 58.9, respectively) from the previous quarters. The quarterly high from the past six quarters was 63, recorded in the March quarter last year.

SEEK’s August Employment Report, released earlier this morning, shows that national job ad volume grew by 0.3% in the second consecutive month of job ad growth, after the three previous months’ declines (see graph, above). On a state and territory basis, Victoria led the way with a 2.3% rise in job ads during August.

The conversations I’ve had with recruitment agency owners over the past few weeks would, anecdotally, support the optimism shown in both the ABS, JobAdder and SEEK data.

An interest rate cut would be a huge boost to consumer and business confidence and overnight, the US Federal Reserve, as expected, took the global lead and cut interest rates. The half a per cent cut brings U.S. interest rates into the 4.75% to 5% range.

The Australian government will no doubt be monitoring the impact of the world’s largest economy cutting interest rates for the first time in four years, hoping for a positive flow through locally.

Next Thursday’s release of the four-monthly update of national vacancy data will be another set of labour market data that would, if showing a plateauing of the 28-month decline, send a very positive signal that the sun is heading back to high-in-the-sky for the local labour market.

Overseas workers good – rising participation rate better

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Posted in Recruitment