Slowing business activity means Aussies will find it harder to land a job in coming months

slowing business activity means aussies will find it harder to land a job in coming months

Jim Chalmers says households, the domestic economy and the global economy are all under pressure. (ABC News: Nick Haggarty)

Economists say the employment market has turned and it’s going to be harder to land a job during the next six months as the economy slows.

“I absolutely think the jobs market is slowing right down,” CreditorWatch chief economist Anneke Thompson told ABC’s PM program.

Official data this week showed the unemployment rate bouncing up to a two-year high of 4.1 per cent, as an estimated 22,000 jobs were shed in January.

CreditorWatch monitors business activity month to month by looking at the total value of all invoices made by firms.

Its January Business Risk Index data showed a steady decline in the average value of B2B (business-to-business) invoices during 2023 and into January 2024.

Based on that data, Ms Thompson said it looked like businesses were doing less, and simply didn’t need extra staff as much.

“We can see a significant slowdown in business activity, and there are other indicators like NAB’s business sentiment survey, which shows business conditions are falling and business confidence has been quite low for some time,” she said.

“I think that all those signs tell us that businesses are expecting much weaker conditions at least for the first six months of this year.”

Global recruitment firm Robert Half said if companies did have projects, they were opting to hire workers on a temporary or contract basis rather than creating a new position.

“They’re looking at existing staff in terms of ‘Do we need to make that hire?'” director Nicole Gorton said.

She said businesses were focused on ensuring any hire makes “business sense”.

“So I think companies are still hiring, but they’re just working out ‘At what point [do] we do that, and do we get a contractor in for a period of time?'” she said.

“Because it might be that that workload or that project is actually [a case of] “We get through it — and we don’t actually need a permanent head count.'”

Analysts have reported that activity is slowing in construction, the renovation sector, and retail trade, as well as cafes and restaurants.

Business groups have also expressed concern at the lack of enthusiasm to hire workers.

Business Council of Australia chief executive Bran Black said employment rose by just 500 jobs in January.

“We are seeing a significant slowdown of employment across Australia with the latest figures, and unless we get serious about addressing business conditions, the economy will continue to slow — and that’s bad for workers and bad for businesses,” Mr Black said.

Treasurer Jim Chalmers believes it is all an inevitable consequence of rising interest rates, “persistent inflation, and global economic uncertainty”.

He said households, the domestic economy and the global economy were all under pressure.

Slowdown could alter rates landscape

It’s clear higher interest rates are slowing demand in the economy, which is leading to less hiring and jobs losses.

But what about winning the bigger prize of reducing inflation, especially to the point where interest rates might be cut?

“The question is how quickly will the labour market loosen, and [how quickly] will unemployment and underemployment rise through this year?” ANZ senior economist Catherine Birch said.

“How quickly those factors rise will be an influence on the RBA’s monetary policy setting.”

She warned, though, that there was a risk inflation would stay elevated and the unemployment rate keep rising.

“There are some shifts happening in the labour market,” she said.

“We are seeing hours worked come off.

“It’s harder to find a full-time job than it was, for example, because employers are looking at managing their labour costs.

“But if we were starting to see the labour market deteriorating quite rapidly, then I think you’re more likely to see the RBA step in [and cut interest rates].”

At the same time, the Reserve Bank has repeatedly said it will not cut interest rates until it is confident inflation is heading back to the target band of between 2 and 3 per cent.

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