In February, job ads jumped 8.4 per cent month-on-month to a new pandemic high, 1.8 per cent above the post-Delta peak, which senior ANZ economist Catherine Birch said supports the forecast that labour demand will continue to rise and competition for workers will intensify.
“In January’s labour force data, during Omicron, hours worked dropped sharply (-8.8 per cent m/m) including due to sickness, but most employers held onto workers. There was even a modest net employment gain of 12,900,” she said.
Ms Birch said the February increase reinforces the view that job ads hadn’t yet peaked, with labour demand continuing to grow and job-switching expected to rise.
“We now forecast the unemployment rate to fall to the low 3s by late 2022 and underemployment to fall further,” she said.
Labour supply may get a boost with the opening of Australia’s international border and the expected arrival of skilled migrants, students and backpackers, but Ms Birch said this may not prevent further labour market tightening or wage growth acceleration.
“New arrivals will also add to demand for goods and services (and consequently, demand for labour) in an already strong demand environment. As such, competition for labour is likely to remain elevated,” she said.
“Given our upgraded labour market outlook, the shift in bargaining power towards employees and higher inflation expectations, we should see wage growth accelerate convincingly through 2022.
“The Wage Price Index rose 0.7 per cent q/q in Q4 2021, the strongest quarterly result since 2014, while the national accounts measure of average earnings per hour came in well above the RBA’s forecast.”
