Garry Shilson-Josling, Economist
(Australian Associated Press)
The prospects for a lift in economic growth next year have improved, which is just as well because advertised job vacancies have just hit a 12-month low.
The economy is heading for growth above its recent pace, according to the Westpac-Melbourne Institute Leading Index for August.
“It is the strongest growth rate recorded since December 2013 and a clear positive signal for the near term economic outlook,” Westpac’s chief economist Bill Evans said.
But don’t hold your breath, because the index tells us the likely pace of economic growth three to nine months ahead – in other words, from November through to May 2017.
It could be dreary for job seekers in the meantime, because the Department of Employment’s index of internet-advertised vacancies dropped to its lowest point for 12 months in September.
The trend in vacancies has now slipped gradually lower for three months.
That’s a reversal of the rising trend in vacancies that followed the low point in late 2013.
It was never an especially strong trend, but was enough to stem the rise in the unemployment rate, which eventually peaked in the summer of 2014/15 and has edged lower ever since.
Within that upward trend there have been some pauses where vacancies appeared to be heading lower, only to resume their upward march.
The leading index figures offer some hope that this is what will happen again.
But we could be waiting a while.
The labour market tends to react to fluctuations in economic growth with a delay of six months or often more.
So, if the leading index tells us the likely strength of the economy around six months from now, then it could be a year, and quite possible a bit longer than that, before the good news in the leading index shows up in the form of job vacancies being advertised.