What does it all mean?

Telco giant Telstra’s announcement that it will reduce 8,000 employee and contractor positions will hog the headlines today. But one company’s struggles in a highly competitive global telecommunications market isn’t necessarily a true reflection of what is occurring more broadly across the evolving Aussie jobs market.

In fact it wasn’t long ago that Australia’s resources sector was in the doldrums following the end of the mining construction boom. Well there is light at the end of the tunnel for Western Australians.

Job vacancies in the West are leading the country and are at 3-year highs. And while Perth ads are the best in 2½ years, most ads are being advertised in our mining heartland, the Pilbara and Kimberley regions. Engineers, labourers and construction workers are in huge demand.

And it’s little wonder. Aussie mining giants BHP and Rio Tinto are hiring workers again after a period of balance sheet consolidation and asset divestment. Profits have rebounded to 3-year highs on the back of rising commodity prices and supply restraints. BHP has recently approved its $2.9 billion South Flank iron ore project with production commencing in 2021. And Rio Tinto plans to start developing its Koodaideri iron ore mine next year.

The mining giants will be building their new mines at a time when Hancock Prospecting is ramping-up its Roy Hill operation, also located in the Pilbara. Hancock has recently lobbed a $390 million bid for Atlas Iron amid increased mergers and acquisitions in the resources sector. 

And in a sign that Australia is employing more people in STEM-related industries, job vacancies have surged by 23.7 per cent and 23.5 per cent for Engineers, and Science Professionals and Veterinarians, respectively over the past year. 

The same can’t be said for Farm, Forestry and Garden Workers with job ads down by 19.6 per cent over the past year.

What do the figures show? 

Skilled Vacancies

The Department of Jobs and Small Business Internet Vacancy Index fell by 0.9 per cent in May after decreasing by 0.5 per cent in April. The index is 5.8 per cent higher than a year ago and is still at levels last seen six years ago.

Job vacancies decreased in all eight occupational groups in May. The largest falls in vacancies were recorded for Sales Workers and Labourers (both down 1.5 per cent) for a second consecutive month. Technicians and Trades Workers, Clerical and Administrative Workers, and Community and Personal Service Workers also declined (all down 0.7 per cent). Smaller declines were experienced by Professionals (down 0.5 per cent), Managers, and Machinery Operators and Drivers (both down 0.2 per cent). 

Job vacancies fell in five of the states and territories in May: NSW (down 0.9 per cent); Victoria (down 0.3 per cent); Queensland (down 1.1 per cent); South Australia (down 0.2 per cent); Western Australia (up 0.8 per cent); Tasmania (up 0.8 per cent); Northern Territory (up 0.5 per cent); ACT (down 1.4 per cent).

Over the year to May, job vacancies have increased in six of eight occupational groups.The strongest gains were recorded by Professionals (up 11.3 per cent), Managers (up 10.0 per cent), and Technicians and Trades Workers (up 8.5 per cent). Also rising were Clerical and Administrative Workers (up 6.2 per cent), Community and Personal Service Workers (up 4.5 per cent) and Machinery Operators and Drivers (up 4.4 per cent) also rose. But job advertisements decreased for Sales Workers (down 7.3 per cent) and Labourers (down 5.6 per cent).

Job advertisements increased in five states and the two territories over the year to May. Western Australia recorded the strongest rise (up 18.0 per cent), followed by the Northern Territory (up 10.3 per cent) and Victoria (up 8.1 per cent). Tasmania (up 7.2 per cent) and NSW (up 5.3 per cent), ACT (up 3.6 per cent) and Queensland (up 0.4 per cent) all increased. The only fall was recorded in South Australia (down 1.7 per cent).

What is the importance of the economic data?

The Department of Jobs & Small Business releases a monthly Internet Vacancy Index. The index is based on a count of online job advertisements newly lodged on three main job boards (SEEK, CareerOne and Australian JobSearch) during the month. The index is the only publicly available source of detailed data on online vacancies, including for around 350 occupations (at all skill levels), as well as for all states/territories and 37 regions.

What are the implications for interest rates and investors?

Australia’s employment market is evolving. Job creation has slowed from record highs in January and more part-time jobs are being added due to record female worker participation.

The composition of the workforce is changing, as are broader market influences. Today’s skilled internet job vacancies are near 6-year highs, complementing other leading job indicators such as the ANZ job ads index, which is at 7-year highs.

According to SEEK, skill shortages are emerging in the Mining and Energy, Science and Technology, Trades and Services, and Construction industries over the year to May. The tightening of the labour market should see eventual wage gains in these sectors, gradually boosting inflation.   

CommSec expects official interest rates to remain stable until early 2019.

Ryan Felsman is a senior economist at CommSec.