- Australian job ads fell steeply again in March, according to data released by ANZ Bank.
- In the past, falling job ads have usually signalled that unemployment is likely to increase in the period ahead.
- While online job ads are falling quite quickly, Australia's unemployment rate currently sits at 4.9%, the lowest level in eight years.
- That outcome appears to be more consistent with total job vacancies which hit the highest level on record earlier this year.
Australian job advertisements placed online fell steeply again in March, according to data released by ANZ Bank on Monday.
Total advertisements slumped by 1.7% in seasonally adjusted terms to 166,509, logging the seventh decline in the past eight months.
The decline left the decline in advertisements over the year at an ugly 6%, the steepest decline over a comparable period in well over five years.
“Job ads are not showing any signs of reversing the weakness seen for some time," said David Plank, Head of Australian Economics at ANZ Bank.
The ANZ job ads series measures changes in online advertisements on jobs websites Seek.com.au and the Department of Employment’s Australian JobSearch site, Jobsearch.gov.au.
The recent decline in that series contrasts to official job vacancy data released by the ABS that showed total job vacancies rose to the highest level on record in the three months to February.
So online advertisements are falling but total openings, as reported by Australia employers, stand at the highest level on record.
In the past, a fall in advertising levels usually coincided with a lift in Australia's unemployment rate in the months ahead. However, even with advertisements going backwards, Australia's unemployment rate fell to 4.9% in February, according to the ABS, leaving it at the lowest level in eight years.
Image: ANZ Bank
So the signals on unemployment and the ANZ job ads series appear to be breaking down, at least according to recent data.
According to Plank, the ABS job vacancy series may now be the better guide as to the likely strength of hiring in the period ahead.
"Recent strength in business conditions and job vacancies suggest that the labour market will remain resilient despite weaker job ads," he said.
Plank said the divergence between job ads and total vacancy levels may reflect that job seekers and employers are now connecting in other forums other than traditional job websites, echoing similar sentiment expressed by the RBA late last year.
"We think the divergence may reflect changes in the way firms search for employees, with more possibly directing job seekers to their own websites rather than advertising broadly for every position," he said.
"If this is the case, then the divergence reflects a structural shift in ANZ Job Ads rather than signalling a weaker job market."
Policymakers at the RBA appear to be placing far more weight on total vacancies rather than changes in job ads, continuing to hold faith that firm hiring will help to keep downward pressure on unemployment, and upward pressure on wage growth and inflation, in the years ahead.
However, an increasing number of economists, and those working in financial markets, don't share the RBA's optimism towards the outlook for hiring, suggesting slower economic growth late last year will lead to a similar slowdown in employment growth ahead, and a potential increase in unemployment.
The RBA has previously stated that a sustained increase in Australia's unemployment rate was one outcome that could warrant a further reduction in Australia's cash rate.
Financial markets clearly believe that higher unemployment, at a time when inflationary pressures are already very weak, will force the RBA to act, pricing in a strong possibility that the cash rate will be reduced by 50 basis points by the middle of next year.