Australian job vacancies jump - HSBC

"The collection of partial indicators for Australia's labour market are showing a marked acceleration in the past few months. Today's job vacancy numbers rose by 6% q-o-q in Q3 taking the y-o-y rate to 15.4%, its fastest pace since 2002," notes Paul Bloxham, Chief Economist, Australia, NZ & Global Commodities at HSBC.

Key quotes:

"This followed job advertisement numbers that have accelerated in recent months and surveyed employment intentions which jumped sharply in August. The official labour force survey has also had some strong results recently, with job creation over the past six months the fastest since 2000. The key question is whether it will drive a pick-up in wages growth. We think so. Time will tell."

"As the drag from the end of the mining decline fades into the background and non-mining businesses continue to power ahead, the Australian labour market is tightening up. Improving labour market conditions have been showing through the official labour market statistics, with the strongest job creation over the past six months since 2000 and most of the jobs created being fulltime positions."

"Even more importantly, in our view, the collection of partial timely indicators -- job vacancies, job advertisements and the employment intention components of the business surveys -- have strengthened even further in recent months. Job vacancies leapt in Q3 to be growing at their strongest y-o-y pace in 15 years. This follows a marked acceleration in growth of job advertisements and a sharp jump in the employment intentions component of the NAB business survey in August."

"The key remaining question is whether this tightening in labour market conditions will generate a pick-up in wages growth? Keeping in mind that this is an issue that many other economies and central banks are currently dealing with. Nonetheless, we expect wages growth will start to edge higher in Australia. If history is a good guide, the recent boost to national incomes and corporate profitability should trickle through to higher wages growth. Maybe it will be slower and less potent than in the past, but some trickle through should be expected."

"When it does, we think the RBA will be quick to realise that an economy that is close to full employment, with wages that are edging higher, may not need a cash rate at a record low. We expect the RBA to lift its cash rate in early 2018."