Job ads improve as confidence slowly rises
The number of Australian job advertisements saw a marginal improvement last month, with recent data from ANZ showing total ads increased by 0.5% after plummeting 58% in March and April.
While the number of job ads is still down 59.8% from May last year, the slight pick-up this month suggests that businesses are slowly regaining their confidence and investing in new hires.
“This is consistent with the gradual rollback of COVID-19 restrictions, which has allowed some businesses to reopen, extend trading hours or increase activity and is seeing a recovery in household spending,” said ANZ senior economist Catherine Birch.
While the JobKeeper wage subsidy has helped preserve ties between many employers and employees, close to 600,000 Australians lost their jobs in April and further 600,000 became underemployed.
Economists are expecting labour market conditions to continue to worsen over the coming months before picking up in the second half of the year as the economy emerges from hibernation.
“We expect to see another net employment loss in May, reflecting the weakness in labour demand in the second half of April and early May. But a period of rapid improvement in the labour market is likely from midyear, as business activity rebounds,” Birch said.
“Over the longer term, though, the recovery in employment will be more of a grind. Some firms will prioritise increasing their current workers’ hours over hiring new workers and the fiscal cliff in September looms.”
This tracks with recent statements made by Treasury Secretary Stephen Kennedy. At a senate committee on Tuesday he said the economy was faring better than expected and the unemployment rate will likely be closer to 8% by September.
While both the Treasury and Reserve Bank were expecting unemployment to hit double digits, the early relaxing of restrictions has led many to rethink their initial forecasts.
“We have been steadily revising down our expectations of how high the unemployment rate will rise, because of the fact that the health scenario has continued to improve,” Kennedy said.
He also said firms typically increase hours worked before taking on new hires, resulting in “hours recovering more rapidly before they begin to soak up additional jobs or engage additional people.”
The most recent read of the labour market puts the unemployment rate at 6.2% in April, however this excludes those on JobKeeper who are working zero hours and those who have dropped out of the labour force completely.
A clearer picture is provided by the number of hours worked, which fell 9.2% between March and April - double the decrease in employment (4.6%) - and is expected to fall further in May.
For information about the assistance available to households and businesses, along with tips to keep your finances in good health amid the current crisis, browse our guide to coronavirus and your finances.