A fall in job vacancies in the latter months of 2011 is a warning that the unemployment rate is likely to edge up in the months ahead.
That positive side of that warning is an enhanced prospect of interest rate cuts.
The Australian Bureau of Statistics (ABS) reported on Wednesday that the number of vacancies fell by 3.3 per cent in seasonally adjusted terms between August and November.
As a result, the number of vacancies for every 100 unemployed people fell to 28.5 in November, its lowest since May 2010, after peaking at 31.4 in February 2011.
The labour market has nowhere near the kind of weakness seen in the 1990s during and after Australia’s most recent recession, when there were five or fewer vacancies for every 100 unemployed for three years in a row.
On the other hand, the number of vacancies per 100 unemployed averaged 37.7 in the year leading up to the global crisis in 2008, so the labour market is well short of the strength seen not long ago.
And it seems clear that demand for labour is waning, with the number of vacancies falling in three of the past four three-monthly surveys to be down by 6.7 per cent through the year to November.
The vacancies figures support the latest forecast from the Reserve Bank of Australia (RBA), in its quarterly statement in November, that unemployment will “rise a little”.
That prospect should support expectations of a further lowering of interest rates by the central bank, especially as the second part of that forecast – that unemployment will fall “gradually as the economy gains momentum later in the (two year) forecast period” – still seems to be a fair way off.
