Jobs market pressure easing: Economy roundup

Tight labour market conditions that have posed a key impediment to business growth over the past year appear to be easing, new data on wages and vacancies shows.

Tight labour market conditions that have posed a key impediment to business growth over the past year appear to be easing, new data on wages and vacancies shows.

The Department of Workplace Relations Skilled Vacancies index shows the number of skilled unfilled positions held by employers fell 1.7% in August.

The Skilled Vacancy index is now 11.4% lower than it was 12 months ago, a fact that probably reflects both that employers are finding it easier to fill roles and their reduced hiring intentions.

On the wages side of the equation, the Melbourne Institute Wages Report shows growth in total pay slowed from 7.5% in the 12 months to May to just 4.9% for the year to August.

Workers on individual contracts did better than those on collective agreements, with total pay rising 9.5% and 6.1% respectively.

The data is good news for employers who have been struggling to find good staff and to pay ever higher wages bills to keep the staff they’ve got.

And it will also further encourage the Reserve Bank of Australia that conditions are slowing sufficiently that a rate cut could now be warranted.

“High energy and food prices are not feeding into wages. This gives the RBA room for a loosening in monetary policy in response to the current weakening in domestic activity,” Melbourne Institute research fellow Edda Claus says.

Unambiguous signs of weakening are also on show in the Westpac Leading Index of Economic Activity released today.

The index, which reflects perceptions of economic activity three to nine months ahead, was 2% in June, its lowest level since 2001 and well below its long term trend of 3.9%.

Westpac chief economist Bill Evans says the result reinforces arguments for substantial rates cuts in coming months.

“Regardless of the size of the first move, a significant easing in rates is now required,” Evans says.

On the markets today, a lift in resources stocks thanks to some positive movement in commodity prices has helped the S&P/ASX200 up 0.4% to 4885.6 at 11.45am. The boost in the resources sector also lent some support to the Australian dollar, trading at US87.15c.