On Monday, we received further evidence that Australia’s job market is cracking, with ANZ-Indeed reporting that job advertisements fell by 2.2% in June, the fifth consecutive monthly decline:
As illustrated in the following chart from Justin Fabo at Antipodean Macro, the ANZ-Indeed job ads series has diverged massively from the official unemployment rate reported by the Australian Bureau of Statistics (ABS):
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It is also worth pointing out that Australia’s labour market is growing at a near record pace of 2.9%, meaning that labour supply is growing at the same time as employer demand for workers is falling.
This should be a bona fide recipe for rising unemployment.
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Interestingly, Fabo also reported that Google searches for “redundancy” have risen for two consecutive years and are now tracking above the level recorded prior to the pandemic:
Recall that the latest Statement of Monetary Policy (SoMP) from the Reserve Bank of Australia (RBA) forecast that Australia’s unemployment rate will peak at 4.3% early next year:
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Based on the above data, this unemployment forecast from the RBA looks overly optimistic.
If so, rising unemployment will work against tighter monetary policy, given the RBA’s dual mandate of price stability and full employment.
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The official June labour force release from the ABS is shaping as an important metric that, alongside the Q2 CPI print, will determine whether the RBA hikes rates at its meeting in early August.