Mixed messages in the labour market

Conflicting data has been released this week in relation to the Australian labour market. Anecdotal evidence also suggests that employers are on tenterhooks and playing the waiting game. Projects are being delayed, apprentices no longer required, permanent recruitment is on hold and demand for temporary or casual labour has increased.

According to the ANZ Job Advertisement Series for Australia, the total number of jobs advertised in major metropolitan newspapers and on the internet fell by 5.9% in October to a weekly average of 231,135 per week. This followed a fall of 1.4% in September.

ANZ Head of Australian Economics Warren Hogan, said: “Total job advertisements continued to fall in October, down 5.9% in the month, to be 9.8% lower than a year ago. As a leading indicator of economic conditions in Australia, the latest job advertisements data suggest the global financial crisis has had a substantial impact on the Australian economy. Internet job advertisements fell 5.5% in October, the third consecutive fall in a row and the fourth monthly decline in the past six months.

This month’s ABS Labour Force series reported a different scenario altogether. Employment increased Australia-wide and in Tasmania, the unemployment rate dropped further to 3.7%, compared with the national average of 4.3%. The participation rate remained stable at 62.6%, total employed increased to 242,000 (167,600 of them full-time) and unemployed decreased by 300 to 9,300 persons statewide.

The ABS Labour Force outcome appears at odds with the ANZ Job Advertisement Series and the broad-based slowing in economic activity and is most likely an example of the volatility of the monthly surveys and the lag time required to provide a true reflection of the labour market.

At this stage, this data confirms that at best Australia has experienced only a very moderate response from the labour market to weakening economic conditions and prospects. However, most economic commentators believe the worst is yet to come, consistent with the downward trend in forward-looking indicators and the now weaker economic outlook.

That said, Tasmanian indicators suggest that the magnitude of the impact will not be as significant as in other Australian states.