Job vacancies fell by 3.3 per cent in the December quarter (November reference month) to 181,000 vacancies – marking the lowest result in 18 months.
Across the sectors the bulk of the losses in the year to December were recorded in Administration & support services, retail trade, health care & social assistance and manufacturing.
Over 2011 job vacancies fell by 6.3 per cent, resulting in the biggest annualised yearly fall since 2002.
Over the past year job vacancies in the mining sector rose by 33.8 per cent followed by communication services up 31.6 per cent.
What does it all mean?
The slowdown in the domestic economy over the past year certainly took its toll on labour market. Job vacancies fell by over 6 per cent in 2011, marking the biggest fall in 9 years. Not only were there less jobs on offer but even the conversion rate to job creation has been poor. In fact over the first 11 months of 2011, a paltry 44,700 news jobs were created – marking the weakest result for a similar period in 15 years. The dearth in consumer spending, slowdown in housing activity and overall tougher trading conditions for businesses has clearly taken its toll on the labour market.
With so much uncertainty around, it is understandable that businesses are in no mood to hire staff. If a business does experience a short-term increase in orders or new work, it is more likely to be met by hiring temps or part-time staff, via a lift in overtime or by working staff longer "normal" hours.
Interestingly the latest result has highlighted the compounding weakness in certain sectors of the economy as employers look to reduce costs while attempting to stay afloat. In fact the biggest casualties of the sluggish economy have been administration and support staff with almost a 40 per cent slide in job vacancies in the past year. Similarly the contraction in retail and manufacturing activity has seen vacancies fall by 18 and 13 per cent respectively. In contrast vacancies in the mining sector have risen by an astounding 34 per cent over the past year. Granted the mining sector is not a major employer but it does provide a substantial multiplier effect for regional economies.
But with hiring down, unemployment is set to edge even higher in coming months. The jobless rate is likely to lift – albeit modestly - from 5.3 per cent to around the 5.5-5.75 per cent region. A softer job market will keep downward pressure on wages and prices and should provide the Reserve Bank more reasons to deliver another rate cut. CommSec expects interest rates to be once again cut in February.
What do the figures show?
The number of job vacancies fell by 3.3 per cent in seasonally adjusted terms to 181,000 in the three months to December (November reference month) – marking the lowest reading in 18 months. Over the past year job ads fell by 6.3 per cent – marking the biggest yearly fall since early 2002.
In original terms job vacancies fell by 2.7 per cent with the ACT leading the declines (down 18.3 per cent), followed by the Northern Territory (down 16.1 per cent), Victoria (down 9.1 per cent), South Australia (down 3.4 per cent), Queensland (down 2.7 per cent) and Western Australia (down 0.9 per cent). Job vacancies rose the most in Tasmania (up 13 per cent) and NSW (up 4 per cent).
Across the sectors Administrative & support services (down 12,300 job vacancies) led the declines over the year to December, followed by Retail trade (down 3,600), Health care & social assistance (down 3,500), Arts & recreation services (1,800) and Manufacturing (down 1,700).
The Mining sector recorded a 33.8 per cent increase in job vacancies over the past year, followed by a 31.6 per cent increase in Communication services.
What is the importance of the economic data?
The Australian Bureau of Statistics releases Job Vacancies data each quarter. The data is useful in gauging the strength of the job market.
What are the implications for interest rates and investors?
The job vacancies data confirms the job market has clearly softened, robbing momentum from the economy. While existing workers may be able to get extra overtime, it's not the same as adding additional workers to payrolls. When a worker gets a job there are potential flow-on benefits to the housing and car markets as well as broader retail spending. In the current environment if a worker gets more overtime, the extra income is likely to be saved rather than spent.
A further rate cut remains on the radar screen. And given the ongoing instability in Europe and slowdown in China it is likely that the Reserve Bank will look to shore up confidence but cutting rates in February.