Australia’s staffing shortage crisis has worsened with almost a half a million jobs available meaning the number of vacant positions now nearly equal to the number of unemployed.
Job vacancies surged again in the three months to May to be up 13.8% quarter on quarter and are more than double their pre-pandemic levels (+111% on pre-pandemic levels).
The sheer volume of job vacancies mean is that even as higher inflation and rising interest rate curtail demand growth, it will take time for this to push up our unemployment rate.
This also means it is likely that unemployment could even be in the low 3's" this year and stay there throughout 2023.
Of course this very low unemployment rate is an important reason why the Australian economy is likely to remain resilient in the face of high inflation and interest-rate
Labour demand is incredibly strong even with the unemployment rate already at 3.9% with the number of unemployed persons per job vacancy now sitting at just 1.1, compared to 1.3 last quarter and 3.1 just prior to the pandemic.
The latest data suggests that the labour market may be tighter than what the RBA had assumed.
The RBA had expected the unemployment rate to trend lower to 3.7% by year-end, but job vacancies further increase the risk of a faster acceleration in wages growth.
Increases in the three months to May were largest in NSW and Victoria, some catch up to even stronger levels seen elsewhere after recording the smallest (but still large) gains relative to pre-pandemic in February. Vacancies rose 18% in Victoria and 12% in NSW.
In other states, it tended to be a story of very elevated levels of vacancies being sustained, with growth within +/- 3%.
Western Australia and Northern Territory continue to lead growth in vacancies relative to pre-pandemic, 136% and 166% higher respectively, but recorded declines in the 3 months to May.
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By industry, the highest growth over the quarter was in Retail trade (38%), Information media and telecommunications services (18%) and Arts and recreation services (16%).
The sharp rise in retail trade this quarter more than unwinds a decline last quarter.
Relative to pre-pandemic, the growth in vacancies continues to be largest in arts and recreation, accommodation and food, and rental, hiring and real estate industries.
The accommodation and food services, manufacturing, arts and recreation, and Real Estate industries have seen the largest increase in their job vacancy rates.
One factor contributing to the high number of job vacancies is the slow return of migration to Australia following the pandemic, with the latest international arrivals data actually showing a small net outflow of permanent and long-term migrants in April.
Another is increasing labour market churn (moving to higher paying jobs) and resignations.
Replacement or resignation continues to be the largest driver of vacancies, cited by 4 in 5 businesses with a vacancy and similar to its pre-pandemic share at 80.4% vs 78.6% in February 2020.
The share of businesses with at least one vacancy citing increased workload as a reason remained elevated at 47% in May, compared to just 35.9% prior to the pandemic.