Australia Job Ads Surge 7.4%, Auguring Labor Market Recovery
(Bloomberg) -- A closely-watched gauge of Australian job vacancies jumped in response to an easing of coronavirus restrictions across the nation’s east coast, signaling a strong rebound in the labor market is in the offing.
Australia & New Zealand Banking Group’s monthly help-wanted ads surged 7.4% in November to be a record 44.2% above their pre-pandemic level. The rise reflects a robust recovery in the nation’s two largest states of New South Wales and Victoria, where newly-lodged ads jumped about 17% and 15% respectively.
The result suggests the economy’s recovery is gaining momentum after a lockdown-induced contraction in the third quarter that helped push unemployment to 5.2%. The Reserve Bank of Australia is using record low interest rates to try to tighten the labor market sufficiently to unleash faster wages growth and return inflation to the 2.5% midpoint of its target.
“The unemployment rate should drop back below 5% in the near-term, and we expect it to fall to around 4% by the end of 2022,” Catherine Birch, a senior economist at ANZ, said in Monday’s release. “Competition for labor will get even hotter and workers will exercise their new power by changing to better jobs and asking for higher wages in 2022.”
While the RBA reckons it will take about two years for the economy’s strength to translate into faster price gains and rate liftoff, investors are more optimistic. They’re predicting inflation will revive much quicker and are pricing in rate increases from around the middle of next year.
Birch expects annual wages growth will climb to around 3% in the second-half of next year from a tepid 2.2% at present.
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