The latest job vacancy figures should be good news, but consumers don’t agree | Greg Jericho

Greg Jericho
‘Yes there are jobs available but many are not in the industries and areas of those who are losing their jobs.’ Photograph: Bloomberg/Bloomberg via Getty Images

The latest job vacancy figures are the perfect example of difficulty in finding good economic news. Yes the figures are positive, but not startlingly so. Yes we have just seen a record number of quarters where vacancies went up, but in that time they haven’t really gone up by much. It’s just a continuation of news that is the economic equivalent of “nice”, and as the latest retail figures suggest, we’re getting a bit sick of it.

There haven’t been too many good economic records set in the past decade, but in February, for the 14th quarter in a row, the trend level of job vacancies grew. That beat the previous record set from November 1991 through to November 1994.

It should be great news. But it says something about the steady-but-slow level of growth we are currently experiencing that in the 13 quarters coming out of the 1990s recession, job vacancies grew by 169%, whereas vacancies are only 33% higher than they were when the current streak began in August 2013:

And while the number of job vacancies in the February quarter (Dec-Feb) reached 175,300 – up 2.3% from the November quarter last year – the figure that economists worry more about is the job vacancy rate – which measures vacancies as a percentage of the labour force.

And here the news is again pretty good, if not record setting great. The current vacancy rate of 1.33% is the best since August 2012:

That is a good sign as it suggests that there are jobs around, and the fight to get one should be easier than it has been for a while.

The reason why economists like the job vacancy figure is because there is generally a good link between it and the unemployment rate. The link is called the “Beveridge curve”. As a general rule, when the job vacancy rate goes up, the unemployment rate goes down.

But at the moment that is not happening as well as in the past:

Given the current vacancy rate, you would expect the unemployment rate to be around 5%, or even a touch lower.

That it is not speaks to the quite large structural change that has happened since the end of the mining boom. Yes there are jobs available but many are not in the industries and areas of those who are losing their jobs.

But overall the picture is better than it was. The actual fight for jobs is much easier than it has been for some years. Across the nation there are on average 4.4 unemployed fighting for each job vacancy – the smallest since November 2012.

The picture is less joyous if we also include the underemployed. This combination of “underutilised” workers makes the fight for each vacancy much harder. Across the nation there are 11 underutilised workers for every job vacancy.

But we should be a bit careful jumping to the conclusion of saying that there are 11 people going for every job.

While, as I have noted, underemployment is a big issue, unlike the unemployed, not all people who are underemployed are actually looking for a job – many just want more hours in the job they already hold.

And while the 11 underutilised per vacancy does seem high, it is also the lowest it has been since November 2012.

The problem of course is the national picture is greatly varied.

Excluding the territories (which have small populations – and in the case of the ACT, no issues of distance), the NSW is the easiest place to find work.

In NSW there are just 3.0 unemployed on average per vacancy compared to 6.3 in South Australia and 7.8 in Tasmania, and both the mining states remain much harder places to find work than in NSW and Victoria:

The situation in NSW and Victoria is also improving better than in other states.

Two years ago there were on average 4.5 unemployed in NSW going for every vacancy; a year ago that was down to 3.7; and now it’s at 3.0. In Victoria the drop has been even faster – from 6.0 unemployed per vacancy in February 2015 to now 4.2.

In Queensland, things have improved slightly over that same period, but the improvement seems to have stopped. In February 2015 there were 6.1 unemployed per vacancy – almost the same as in Victoria; by this time last year that had fallen to 5.5, but since then has levelled off, and now sits at 5.6 per vacancy.

At least they’re doing better than Western Australia. Two years ago just 3.3 unemployed were on average fronting up for every job vacancy in WA; now it is 5.2:

The growth in vacancies is strongest in industries like education, and real estate, but there is little sense of whether the vacancies are growing in industries with high shares of full-time or part-time work:

As a forward looking indicator, the job vacancy figures don’t suggest a surge in employment coming down the pipeline, but neither do they suggest things are going to get worse. And so the news on jobs is in that classic not-bad-not-great position.

Yes, a bit meh, but meh is better than bleurgh.

However, it would seem that we as consumers have adopted a view that things are actually a bit bleurgh.

The latest retail sales figures out yesterday showed sales fell in February in seasonally adjusted terms. The annual growth of 2.7% is the worst for four years, and the start to the year is the worst in trend terms since 2010:

The poor figures are a combination of less than stellar job growth, utterly pathetic wages growth and no sense of much improvement on either in the coming months.

The job vacancy figures might not be all that bad, but clearly Australians are rather less than enthused with where they think the economy is heading.

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