So with inflation up in April, house prices stronger than expected, but easing, a strong jobs market isn’t what the Reserve Bank will want to see.
April’s labour force figures are out on Thursday and the market believes job creation will slow to around 5,000 to 10,000, compared to 14.800 in the first estimate in March.
The rate will remain around 4.1% or 4.2%.
Employment is a lagging indicator, or rather job losses lag other indicators, such as retail sales.
It all depends on the confidence of business: those with tight production schedules are these days loath to sack people: cutting hours or working people less via part time employment is one way to go, though whether the new labour laws will allow such flexibility is another thing.
The most important forward indicator for the jobs market seems to be the ANZ job ads series and in February and March it slowed as the number of new job ads dropped, especially in newspapers.
But figures out yesterday show a rebound in April.
The survey showed a 3.1% rise in April to an average of 275,390 a week.
Newspaper job ads – which fell to a 14-year low last month (Early Easter perhaps?) – bounced back with a 16.5% rise for an average of 19,934 a week and increased in every state.
Newspapers in South Australia (14.7%), Queensland (13.4%), Victoria (10.9%) and Tasmania (10.6%) were the best performers.
On the net, a 2.2% rise in ads to 255,456 a week.
Despite the April rebound, the number of jobs are back to a level similar to where they were in January this year, before the Reserve Bank started getting very worried about inflation in February, after the December quarter CPI.
So ignoring the strong rebound in April, the real story is that jobs growth may be just starting to show a sign of easing back.
Which is what the Reserve Bank wants to see. An unemployment rate of say, 4.3% or worse in Thursday’s figures, would be in the same vein as an indicator: some slowdown, but no surge in job losses.
The point to watch in Thursday’s figures is the rate of growth in jobs in the year to April. That will be a good show sign of whether the strength is draining from the employment market.
Goldman Sachs JBWere said yesterday in a preview of the figures on Thursday that "Looking ahead, labour market conditions should weaken somewhat, in line with the abrupt slowing in consumer demand evident in the March quarter.
"However, the precise timing of this softening is difficult to gauge, partly due to the degree of “labour hoarding” it appears is taking place – essentially, employers who have struggled to secure sufficient labour over recent years are unwilling to shed it at the first signs of an economic slowdown."
Don’t under estimate that factor: it is what has emerged in the far weaker US jobs market where the number of people on involuntary part-time work is now the highest for over a decade.
