Labour market concerns impact consumer confidence

People are becoming increasingly uncertain about what the future might have in store for their jobs – and it’s been reflected in the December Westpac-Melbourne Institute Consumer Sentiment Index.

The index declined 5.7 per cent from November levels, with the reading falling from 96.6 points to 91.1. Bill Evans, Westpac’s chief economist, said the results were concerning, especially given now they are at their lowest level since August 2011.

“Not surprisingly, respondents have increased their anxiety around the labour market,” noted Mr Evans.

“The Westpac-Melbourne Institute Unemployment Expectations Index increased by 4.4 per cent to
159.5 (recall that a higher level indicates more consumers expect unemployment to rise over the next 12 months).”

As a result, this is the highest reading seen since June 2009, which immediately followed the global financial crisis. There has only been one result that exceeded this, recorded in March this year.

However, the labour market might not be facing the difficulties some people expect, especially as another recent survey pointed to an increase in job listings last month.

The ANZ Job Ads series showed that job advertisements increased 0.7 per cent in November to mark the sixth consecutive rise. Much of this increase was a result of online job listings, which were up 0.9 per cent from the previous month.

ANZ Chief Economist Warren Hogan said there has been a strengthening in demand for labour, as a number of leading indicators have pointed to a rise in opportunities. Although conditions have improved, he believes a number of headwinds are likely to be encountered in the near future as new challenges and opportunities start to arise.

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