Analysis: Job ads look to have topped out – what does it mean?
SEEK new jobs declined for the second consecutive month in July. Declines were broad‑based with 24 out of 30-sub-sectors seeing consecutive monthly falls. There is a lot of uncertainty in how to read this development given the tight labour market and still very positive business conditions as seen in today’s NAB Business Survey. Are employers giving up advertising? Does it reflect a peak in demand for particular industries? or could more migrants be coming across the border?
In this Weekly we look at job ads in more detail to see what they may be portending for activity, and we also cross check the data with other information. Our headline takeaway is it is still too early to be definitive, but there has been a topping out of job ads in certain sectors where higher rates are biting. In other sectors, the decline in advertising is hard to reconcile with the still tight labour demand backdrop. Notwithstanding recent declines, the level of advertising is still well above pre-pandemic and supports notions of a tight labour market.
Breaking down SEEK job ads by industry sub-sectors reveals a broad-based decline in ads over the past couple of months. A few industries saw an earlier peak in advertising, including ‘design & architecture’ and ‘banking & financial services’ as early as November 2021. Despite the decline seen over the past few months the level of job advertising is still 60.6% above pre-pandemic December 2019 levels. There are only two sectors which have job ads lower than pre-pandemic levels.
Among sectors which look to have peaked are those related to the property industry. Ads for ‘design and architecture’ peaked in November 2021 and have fallen by 16.4% since that peak, while more recently ‘real estate and property’ are -10.8% m/m since April 2022 as is trades and services at -7.9% m/m. The decline in new job ads within property is consistent with house price and turnover data which have declined, as well as anecdotes of builders announcing job cuts.
Another area which is topical at the moment is the consumer and whether price rises, and higher rates are starting to bite. Job ads suggest labour demand still remains incredibly strong in the most consumption-sensitive sectors with ads 68-132% above pre-pandemic levels. More recently there has been some decline, especially for hospitality and tourism, which given anecdotes may reflect employers giving up advertising given the lack of suitable candidates or the maturing of rehiring demand alongside reopening.
Our conclusion is even with these tentative trends seen in job ads, it is still very difficult to find labour. SEEK’s applications per job ad declined again in June (-1%) with the number of applicants per ad down a further 29% from June 2021 levels. Today’s NAB Business Survey showed a similar trend with capacity utilisation at record high levels along with strong growth in the wages bill. So while SEEK job ads may be an early signal that unmet labour demand may have stopped increasing, the levels of advertising still indicate strong demand for additional labour.
Chart 1: SEEK job jobs declined in July, but remain at very elevated levels
Chart 2: Job ads in certain property industry sectors have fallen, but the levels still remain very elevated for trades & services and construction, reflective of the strong backlog of work
Chart 3: Some labour market tightness is due to a slower resumption of migration. Some signs that this may improve with student visas granted back to pre-pandemic levels. China’s zero-COVID policy is a key uncertainty here given Chinese students comprised around 30% of all foreign students pre-pandemic.