The ANZ job ads report for June and the latest job vacancies report for May from the Australian Bureau of Statistics (ABS) give considerable support to the emerging rebound in the labour market – something many economists, commentators and others simply believe isn’t happening, or else they don’t believe or understand the data.
In fact both measures show that growth in job ads/vacancies is now back to pre-2016 levels (before the great fall off last year) with the number of job ads back to levels not seen since 2011.
Every time the Australian Bureau of Statistics produces its monthly labour force report, there’s a chorus sceptics at what is being reported – with almost all the commentary based on the seasonally adjusted data and very little concentrating on the trend report. Many of those should know better because they understand the trend reporting has less volatility than the seasonal adjustment.
And many media commentators seem to be conditioned by the continuing job losses in their sector, especially print, while others seem to be taking the store closures and job losses in retail as an indicator of what is happening in the wider economy – it clearly isn’t.
Much of the moaning is technical and relates to the unreliability of the ABS collection process, the fact that the chief criteria for employment is tiny (an hour), that the figures understate the true unemployment picture and that the underemployment is a far greater concern (which it can be and is misunderstood).
But like 2015, the ABS reports from the start of this year show a strong surge in full time work and a drop off in part time employment growth and a rise in hours worked – signs of a strengthening jobs market – and all with record low wage growth of 1.9% (for the past two quarters, the lowest recorded).
Some of the past complaints have been spot on with the ABS indeed guilty of botched data collection, poor sample selection and other problems. But to draw attention away from the volatile seasonally adjusted data, the ABS has been emphasising the trend series data for more than a year. But the moaning continues.
For example many commentators have expressed disbelief at the rebound in jobs growth so far in 2017. The ABS said in its report for May: “Full-time employment has increased by around 124,000 persons since September 2016, with particular strength over the past five months, at around 20,000 persons per month,” said Chief Economist for the ABS, Bruce Hockman.” The jobless rate dropped to 5.5% (seasonally adjusted), the lowest for four years, which bought more ridicule from the critics
But the improvement is very real – employers are telling us that very point by advertising for new staff and spending millions of dollars in doing so. The labour market is in fact in the best position for two years, contrary to received wisdom.
In fact the ANZ job ads report for June yesterday showed a solid end to the financial year. Seasonally adjusted job ads rose 2.7% in June from May, while in trend terms they were up 1.0%. The ANZ said the trend growth rate over the six months to June was 0.6% a month, double the 0.3% rate for the first six months of 2016.
Seasonally adjusted, job ads have risen 4.9% since the start of 2017, with annual growth jumping from 7.4% in May to 10.5% in June and 7.9% in June 2016. The trend figure jumped to 9.6% in June from 9.1% in May and 7.1% a year earlier.
There were 175,091 job vacancies at the end of June and 2016-17, while on a trend basis there were 172,926. Both were the highest since 2010-11. The ABS job vacancies report for May showed annual growth of 9.2% which is on par with the growth in the ANZ series. The total, 189,200 was a little ahead of the ANZ’s figures in fact.
The Job Ads Survey from the ANZ has been telling us now for more than six months that there was a solid recovery in demand for labour. The seasonally adjusted growth rate in December of last year was just 3.6%, while on a trend basis it was 5.4%.
The seasonally adjusted rate has almost trebled in six months, the trend rate has almost doubled. The ANZ points out that there is now a clear correlation between its series and the ABS labour force series, so the job ads survey is a good indicator.
The ANZ says that its series was a leading indicator earlier in the year, but now the two are back in step meaning a possible slowing in job growth in the ABS reports in coming months,” according to David Plank, the ANZ’s head of Australian economics.
"A feature of the recent data in Australia has been the strength of employment. According to the official labour force data, some 140,000 jobs have been created over the three months to May – with the unemployment rate dropping to 5.5%.
“We think there is a strong element of catch-up in these data, with employment outcomes prior to these three months looking far too weak given indicators such as the ANZ Job Ads survey.
“The gap between the official data and ANZ Job Ads has now largely closed, which suggests that the pace of job gains over coming months should be closer to what we think is the true trend level of 15-20,000 jobs per month rather than the outsized gains seen recently.
"The continued gain in job ads points to this trend being maintained. The ongoing strength of the labour market allows the RBA to effectively disregard the weakness of GDP growth in the first half of this year when it reviews its forecasts for the August Statement of Monetary Policy,” he added.
The next jobs report from the ABS is out on July 20 and will cover June and the 2016-17 financial year.
