Inflationary pressures ease, Australian job market remains resilient
In November, inflationary pressures eased, as indicated by the monthly CPI data from the Australian Bureau of Statistics. However, for investors and economists seeking signs of a weakening labor market, the latest job vacancies data tells a different story.
The figures reveal that demand for labor remained robust in the final months of 2023, with job vacancies for the three months leading up to November decreasing by only 3,000 to 388,700, compared to a revised figure of 392,000 (originally reported as 390,400).
Data from the Australian Bureau of Statistics for the November quarter showed a mere 0.7% decline, a stark contrast to the 8% fall observed in August from May. While job vacancies have dropped 18% from their peak in May of the previous year, they remain significantly higher, up by 70.8%, compared to February 2020, before the pandemic's onset.
The number of vacancies relative to the number of unemployed individuals has not shifted significantly since the peak in May 2022, when there were 480,000 vacant positions and 548,000 unemployed people. By November of the following year, vacancies had only decreased by slightly over 90,000, while the number of jobless individuals had risen by 24,000, pointing to a consistent trend of job placements.
The jobless rate remained stable at 3.9% in both May 2022 and November, even as over half a million people entered the country following the lifting of border restrictions imposed during the pandemic.
David Taylor, the head of labor statistics at ABS, noted in the release that the slow decline in job vacancies from their peak coincided with recent increases in the unemployment rate. However, both indicators continue to suggest that the labor market remains relatively tight. The ratio of unemployed individuals per job vacancy in November was 1.5, higher than the pandemic low of 1.1 but still significantly lower than the 3.1 figure in February 2020.
Furthermore, recent Labor Account data for the September quarter showed that job vacancies still accounted for approximately 2.6% of the labor market, well above the 1.6% from the March quarter of 2020.
The decline in job vacancies was widespread across most industries, with the most substantial quarterly percentage drops observed in Rental, Hiring, and Real Estate Services (-14%) and Education and Training (-12%). The only two industries that saw an increase in job vacancies were Mining (2%) and Public Administration and Safety (1%).
ABS emphasized that job vacancies in many industries remained high compared to pre-COVID levels, particularly in customer-facing sectors like Arts and Recreation Services and Accommodation and Food Services.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.