More unemployed face competition for fewer job vacancies
New figures show there are now five unemployed people for every vacant job in Australia, as two economic forces work in opposition: the number of job vacancies has fallen in the past year, while the number of unemployed has increased by 50,000.
In the past week nearly 1200 jobs have been cut from the mining industry as companies reassess their expansion plans in the face of falling commodity prices.
Australia's most authoritative job vacancy survey, compiled by the Bureau of Statistics, shows there were just 138,700 vacant roles in May, down from 177,800 a year earlier.
Some states and territories fared much better than others. The Northern Territory was the best place to look for work with 2.1 unemployed locals for each vacant job in May. Western Australia was the next best, with 2.6 unemployed people for each vacant job.
By contrast, in NSW there were nearly six unemployed locals for each available job last month, while in Tasmania there were nearly 11 - a ratio that made finding a job unlikely. Victoria remained stable with 5.1 unemployed people competing for every vacant job.
Economists expressed surprise at the result in Victoria, given the state has shed a large number of manufacturing workers.
"If you had asked me which state was doing it toughest I would have said Victoria, without question, because of the high dollar, and because they had a bit of a boom in 2010 and things have slowed down since then," St George chief economist Hans Kunnen said. "It could have something to do with the discouraged worker effect."
Of the 18 industries in the ABS survey, 15 recorded a fall in the number of job vacancies, with mining, wholesale trade and property and business services recording some of the largest declines.
The fall in job vacancies sat uncomfortably with the rise in the unemployment rate. Last month the rate rose to 5.6 per cent, from 5.1 per cent a year ago. More than 687,700 Australians were looking for work last month, up from 624,900 in May 2012.
ANZ economic analyst Savita Singh said job vacancy numbers suggested labour market conditions remained "very soft" and may point to a further rise in the unemployment rate. But Mr Kunnen said the fact the interest rate cycle may not have bottomed meant the labour market could improve next year, while sentiment may also improve once the federal election is over.
"Interest rates have fallen and they could fall a touch more, and we haven't seen the full impact of that," he said.
Frequently Asked Questions about this Article…
The Bureau of Statistics survey shows a sharp fall in job vacancies alongside a rise in unemployed people, signalling a softer labour market: there were 138,700 vacant roles in May, down from 177,800 a year earlier, and about five unemployed people for every vacant job. For investors, this points to weaker domestic demand and potential headwinds for consumer-facing and cyclical sectors.
In May there were 138,700 job vacancies and more than 687,700 Australians looking for work. The unemployment rate rose to 5.6% from 5.1% a year earlier, and the number of unemployed increased by roughly 50,000 compared with the previous year.
Of the 18 industries in the ABS survey, 15 recorded falls in vacancies. The largest declines were seen in mining, wholesale trade, and property and business services.
Mining employers cut nearly 1,200 jobs in the past week as they reassess expansion plans amid falling commodity prices. That contributes to the drop in vacancies in the mining sector and can weigh on investor sentiment for resource-related stocks and regional economies tied to mining activity.
The Northern Territory was the strongest labour market with about 2.1 unemployed people per vacancy, followed by Western Australia at 2.6. By contrast, New South Wales had nearly six unemployed locals per job, Tasmania nearly 11, and Victoria about 5.1 unemployed people competing for each vacancy.
ANZ analyst Savita Singh described the labour market as "very soft" and suggested vacancy numbers could point to a further rise in unemployment. St George chief economist Hans Kunnen noted the interest rate cycle may not have bottomed and rates could fall a touch more, which might help the labour market next year; he also said election-related sentiment could improve conditions.
Yes. Economists cited in the article warned that falling job vacancies and a rising number of jobseekers indicate soft labour market conditions that may lead to a further increase in the unemployment rate.
Keep an eye on monthly ABS job vacancy and unemployment updates, commodity prices and mining sector announcements (which affect resource-region employment), any interest rate moves from the RBA, and shifts in sentiment around the federal election—these factors were highlighted in the article as influencing labour market conditions and economic outlook.
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