Australian Job Index

Executive summary

  • Successive interest rate rises and a fragile global geopolitical landscape have combined to soften the Australian job market during 2023. The Australian Jobs Index fell 14.3% over the last twelve months.

  • This was widely anticipated. The RBA were using monetary policy to weaken employment to bring down inflation. The only surprise was that it took so long!

  • This resilience has largely been attributed to the historical strength of the jobs market and continued skills shortages.

  • It also took until the last quarter of the year to see a clear pattern emerge away from permanent jobs (down 16.9% year-on-year) in favour of flexible employment (down just 5.3% over the same period).

  • The year has been surprisingly weak in Professional Services – down 29.0% over twelve months. Job postings have fallen more than any other single sector.

  • A massive contraction in Q4 results in a net decline of 12.0% in Accommodation and Food Services since December 2022.

  • Public Administration is the only sector to report a rise in demand over the last twelve months. In response to the PWC fiasco, many government agencies at a Federal and State level are looking to in-source work previously performed by external consultancies. This trend is only likely to increase in 2024.

  • Mining, Construction and Utilities fell by 10.5%. Construction was worst hit (down 171%). Even Mining and Resource job opportunities contracted by 7.2% over the year despite commodity prices.

  • Health, Education and Community Professionals is the only occupational group to record expansion in 2023. Just 4.8%.

  • We observed a disastrous 26.3% fall in roles for Clerical and Administrative Workers. Technological advance has meant that there has been a systemic decline in many of these occupations for some years. Now AI is weakening long term employment prospects.

  • A particularly weak final quarter in New South Wales weighed heavily on the national decline but also took what had previously been a subdued year into a very poor one for our most populous state. NSW still has the lowest unemployment rate in the country – 3.4%. This is likely to increase in early 2024.

  • The pattern was similar for Victoria, just not so extreme. Q4 job postings fell 14.2%, taking the annual decline to 16.5%.

  • Whilst the last quarter of 2023 has seen a marked decline in employment prospects for the year ahead this trend is tempered by remaining skills shortages. Demand still at very high levels by historical standards.

Annual Change by Job Type

Chart 2: Annual change in Australian Jobs Index by Type

Job Type Analysis

  • Successive interest rate rises and a fragile global geopolitical landscape have combined to soften the Australian job market during 2023. The Australian Jobs Index fell 14.3% over the last twelve months. The national jobs market actually peaked way back in January but contracted after that.
  • This was widely anticipated. The RBA were using monetary policy to weaken employment to bring down inflation. The only surprise was that it took so long! The contraction only hit double digit decline in Q4. This resilience has largely been attributed to the historical strength of the jobs market and continued skills shortages. During the year employment rose by 381,000 (December 23 Labour Force) yet the ABS still reported 381,000 vacancies in November. Much of the growth in employment can be attributed to net migration.
  • Unemployment has slipped to 3.9%, a 0.3% increase but talk was of 4.5% by mid-year. This remains the RBA target level. As a lead indicator, the weakness of the Australian Jobs Index in December 2023 suggests that unemployment will rise in Q1 2024.
  • It also took until the last quarter of the year to see a clear pattern emerge away from permanent jobs (down 16.9% year-on-year) in favour of flexible employment (down just 5.3% over the same period). Employers have finally recognised that their workforces need to be recalibrated towards contingent work. This affords them some flexibility as business conditions contract. Until Q4 permanent work was still very strong with employers acutely aware of the consequences of talent shortages on production and productivity.

 

Job Trends by Industry

Chart 4: Annual change in Australian Jobs Index by industry (1) 

  • The year has been surprisingly weak in Professional Services – down 29.0% over twelve months. Demand peaked in November 2021 at the end of Covid lockdowns. Job postings have fallen more than any other single sector. The year ended in spectacular style with not just a severe slowdown in hiring but unprecedented retrenchments across the Big Four consulting firms. When the Big Four sneeze, Professional Services catches a cold! Such is (was?) their domination across the sector.
  • Our Professional, Scientific and Technical Services “industry” includes the Technology sector. It too has had a disastrous year contributing to this massive contraction.
  • Healthcare is down 12.8%. It has fallen in three successive quarters. Entrenched skills shortages persist but migration has helped, and there has been some softening in demand since the worst hospitalisations level of the Covid pandemic.
  • Education and Training and Accommodation and Food Services have both experienced volatile movement in demand during 2023. For the latter tourists are back but there has also been an improvement of supply of backpackers and students able to take on more shift work. Higher interest rates have hurt fast food and take away sales. A massive contraction in Q4 results in a net decline of 12.0% in Accommodation and Food Services since December 2022.
  • Public Administration is the only sector to report a rise in demand over the last twelve months. There has been a significant move to convert many contractors to permanent positions but now, in response to the PWC fiasco, many government agencies at a Federal and State level are looking to in-source work previously performed by external consultancies. This trend is only likely to increase in 2024 as projects are evaluated.
Annual job changes by industry (2)

Chart 5: Annual change in Australian Jobs Index by industry (2)

  • All sectors in this cohort suffered decline in job vacancies over the last twelve months. These ranged from 9.6% in Financial Services to 24.6% in Manufacturing and Distribution. Financial Services had been one of the weakest performers, peaking way back in October 2021 but widening interest rate margin may have provided the large banks with cash to invest in projects mothballed during Covid.
  • Even Mining, Construction and Utilities fell by 10.5%. Construction was worst hit (down 17.1%) but even Mining and Resource job opportunities contracted by 7.2% over the year despite favourable bulk non farming commodity prices.
  • Retail and Wholesale fell 15.4%. If interest rate rises are finally adversely impacting discretionary spending in fashion and department stores core sales in Supermarkets and Building and Hardware sub sectors have held up well.

Job Trends by Occupation

Annual Job Changes by Occupation – Managers and Professionals

Chart 6:  Annual change in Australian Jobs Index by occupation

  • Health, Education and Community Professionals is the only occupational group to record expansion in 2023. Just 4.8%. Demand peaked in March ’23 after a bumper first quarter but fell heavily in Q2 and Q3. There was a slight recovery in the last quarter (6.4%) pushing it into the black for the year.
  • The worst performer for the year was Technology Professionals, down a whopping 34.6%. This would be rare in any occupational category but unheard of in Technology. The increased cost of funding has meant that Venture Capital investors have pivoted their start up clients from growth to profitability. Staff have been laid off. More is expected in 2024. At this point work at the larger corporate end has absorbed most of the excess capacity as there are still staff shortages. Salaries and contract rates have however softened considerably in response to a more balanced market.
  • Demand held up relatively well for Executives and Managers and Business Professionals for much of the year. The former peaked as recently as May. A significant contraction in the last three months leaves both well down compared to this time last year.
Annual Job Changes by Occupation – Non-Professional

Chart 7: Annual change in Australian Jobs Index by occupation

  • Job postings for all “Non-Professional” occupations fell during the year. A small rise in vacancies for Trades and Technicians in the last quarter kept its decline own to just 0.4%. This reversed two quarters of decline.
  • Weakness in Construction dragged these occupations down. It would also have contributed to the 10.3% fall for Labourers, Drivers and Operators. The big decline in job opportunities in Manufacturing and Distribution also weighed the index down.
  • We observed a disastrous 26.3% fall in roles for Clerical and Administrative Workers. Tecnological advance has meant that there has been a systemic decline in many of these occupations for some years. The surprise was how well they performed during Covid and the trend towards Working From Home. The latter may have actually helped. But that momentum has gone and once more the threat of technological advance, this time AI, is weakening long term employment prospects.

Job Trends by Region

Quarterly job changes by State/Territory

Chart 8: Annual change in Australian Jobs Index by State/Territory

  • A particularly weak final quarter in New South Wales weighed heavily on the national decline but also took what had previously been a subdued year into a very poor one for our most populous state. The cumulative decline totalled 25.6%. As the impact of interest rate rises was broad and national there is no reason why NSW should have fared particularly badly. It may be more about sectoral focus with NSW heavily dependent on Technology and Professional Services. NSW still has the lowest unemployment rate in the country – 3.4%. This is likely to increase in early 2024.
  • The pattern was similar for Victoria, just not so extreme. Q4 job postings fell 14.2%, taking the annual decline to 16.5%. While NSW had peaked as recently as January 2023, Victoria’s employment market peaked in November 2021 and had already slowed considerably in 2022 from its post Covid peak.
  • Both Queensland and Western Australia ended the year close to where they began, up 0.3% and down 0.7% respectively. While the overall change was minimal both saw strong first quarter growth slowly evaporate in subsequent quarters and heavy contraction in the last three months.
  • Whilst the last quarter of 2023 has seen a market decline in employment prospects for the year ahead this trend is tempered by remaining skills shortages. Demand still at very high levels by historical standards.

About The Jobs Report

The Australian Jobs Index is a measure of demand for talent (workers and professionals). Data is collected from over to 6,000 employer, recruiter and niche job boards across Australia. Repeat advertisements on one site or across multiple sites are de-duplicated to avoid double counting. Artificial intelligence is used to code every job advertisement into a wide range of key fields, from which detailed analysis is possible.

The charts, data, detailed analysis and commentary on the Jobs Report and Jobs Index are developed by Hro2 Research. Raw data is seasonally adjusted and trended using X-13ARIMA then indexed by Hro2 Research. These services are provided to RCSA Australia and New Zealand under license.

Raw data is provided under license to Hro2 Research Pty Ltd by Lightcast. All data in this report is Seasonally Adjusted.