Businesses across Australia chose to take to the labour market with caution during the month of December as job ads fell as a result of the rising case numbers, and the Omicron-induced economic uncertainty that accompanied them.
ANZ published the results of its monthly job ads index on Wednesday, which showed the rate of jobs in Australia dropped by 5.5 percent during the month of December from its revised 17.2 percent jump over the two months previous.
The bank suggested that a record gain in November’s employment figure, which saw 366,100 new jobs added to the economy, was likely a significant factor in December’s falling rate of job ads, which still sits 36.8 percent above pre-pandemic levels.
Catherine Birch, who works as a senior economist at ANZ, suggested that the decrease in job ads might not be all bad news, as the index could indicate that the number of listed vacancies filled outpaced the number of new jobs advertised.
“This seems to explain at least part of December’s ANZ Job Ads drop. A remarkable net 366,100 people found employment in November, a 2.9% month on month gain. While not directly comparable, the National Skills Commission’s Internet Vacancy Index recorded a 0.6% month on month rise in newly lodged job ads in November. But it’s also possible that businesses have become more hesitant to hire due to the spread of omicron and the consequent uncertainty around consumer behaviour and worker availability,” says Catherine Birch a senior economist at ANZ.
According to the data collected by the ANZ, consumer sentiment took a tumble after Christmas and Boxing Day trade. Like job vacancies, consumer sentiment also fell as a result of rising Omicron case numbers, the bank suggests.
However, Catherine Birch believes the consumer sentiment could be about to soon turn the corner.
“Looking ahead, we expect the job-switching rate to pick up in 2022. With so much competition for labour and workers feeling secure in their jobs we should see more people moving to better jobs and asking for larger pay rises in 2022, contributing to stronger wages growth,” said Catherine Birch.
Wages growth reached pre-pandemic levels during the September quarter, in line with what market analysts were expecting, but could yet be a way off triggering a meaningful monetary policy shift, as Australia continues to forge a way out of global inflationary pressures.
Overall wages growth in Australia saw 0.6 percent lift through the September quarter, while year-on-year wage growth swelled to 2.2 percent still well short of the 3 percent growth or more the RBA is looking to capture to forge its way out of record-low interest rates.
The Reserve Bank of Australia has left the cash rate on hold at a record low 0.1 percent since November 2020 14 straight months and has categorically ruled out a lift in 2022.
The central bank will next meet in February 2022, when it’s expected to announce a decision on its chosen approach to quantitative easing.
RBA governor Philip Lowe in late December 2021 said that the bank could dispense with its $4 billion a week bond-buying spree as soon as February, but would sit tight to observe employment and inflation data.
“We have made no decision yet. Much will depend upon the news we receive between now and when we meet in February. Importantly, we will receive further readings on inflation and the strength of the labour market — including the labour force survey later this morning — and learn about the strength of spending in the economy over the Summer. We will also learn more about the actions of other central banks and the effects of the Omicron variant, RBA governor Philip Lowe.