Statsnack: labour outlook brightens

"Another round of employment data has again showed labour demand continues to trend higher."
ANZ Research

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The latest job vacancies data from the Department of Employment shows an improvement of around 12 per cent over the year to October, seasonally adjusted. 

While this trend appears to have softened a little in recent months, the general lift in job advertising this year is notable. 

Other measures of job advertising, save those from the Australian Bureau of Statistics in the past few months, show a similar trajectory – and point to some better employment outcomes in the near term.

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These sorts of labour market indicators are particularly important at the moment, given the underlying trend from the official statistics is difficult to determine. 

Business confidence and capacity utilisation numbers suggest a relatively pronounced pick up in the pre-conditions for hiring, while firms have also noted the labour market appears a little tighter. 

While the recently revised, slightly weaker trajectory of the official unemployment rate surprised us, these other measures provide some evidence that the labour market is (at least) stabilising. 

There are, of course, some headwinds to employment growth going forward, with the recent declines in commodity prices likely to necessitate some further cost cutting in the mining sector. 

However, the strengthening in new labour demand in some labour intensive industries, particularly in construction, health and retail, should provide an offset. 

These trends are broadly consistent with the view that the unemployment rate is unlikely to deteriorate much further from here. ANZ Research does not envisage any material improvement until 2016.