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Australia’s record hiring spree may be about to ramp up even more

Australia’s record hiring spree may be about to ramp up even more

The employment index in the NAB’s monthly business survey jumped to the highest level on record in February, suggesting that strong hiring levels will likely continue.
With strong levels of population growth, elevated hiring levels will need to continue to help lower unemployment and lift wage pressures.
Australian employment growth roared back to life in 2017, adding over 400,000 jobs, the most over a calendar year on record.
While he admits the employment index has overstated total employment growth in Australia over the last year, Alan Oster, Chief Economist at the NAB, says the latest reading suggests hiring levels will likely remain elevated in the months ahead.
“If the surge in the employment index is maintained you would expect to see jobs growth of around 27,000 per month,” he says.
As Oster points out, business conditions are currently the best they’ve ever been, according to survey respondents, with trading and profitability both at extremely elevated levels.
“In the breakdown, the strength in the employment index appears to owe almost entirely to stronger gains in the mining sector, and concentrated in Western Australia,” said Henry St John, Economist at JP Morgan.
“Capacity utilisation, which offers a better signal on the trajectory of the unemployment rate, edged lower to 82.5% from 82.7%.” Markets will get to decide themselves on the current strength of the labour market, and whether the recent hiring spree of 2017 will continue in the months ahead, with the ABS set to release Australia’s official jobs report for February on Thursday, March 22.
Many will be hoping that the NAB is right that progress has been made on lowering underutilisation in recent months, especially those workers in the private sector whose wages are barely keeping up with inflation.
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