Labour supply mushrooms
Overall, the jobs market in Australia has held up pretty well...to date.
However, the chronic labour shortages experienced in 2021 and 2022 are now passing as the economy slows and as immigration continues at record highs.
According to Australia's population clock, the estimated resident population on the country has blazed through 27.2 million.
Recall that we only went through the estimated 27 million
a few months ago, with the population growing by one extra person every 46 seconds, or 1,878 per day.
Source: ABS
Extrapolating that out points to population growth of around +685,000 per year, which is more than the capacity of the country's housing and infrastructure can deal with.
The government is moving to normalise this figure lower, partly through the rejection of more international student visas.
In the meantime, wages growth will almost certainly roll over as employers have more choice.
Anecdotally, from people I know in the recruitment sector in Sydney, hiring sentiment has really turned to custard now, and indeed prospective job losses are on the cards for recruiters themselves in this environment.
In this context, SEEK's Advertised Salary Index increased by +0.2 per cent in March, to be +4.2 per cent higher over the year.
Source: SEEK
That's the slowest annual pace of growth in 18 months, and the monthly increase points to further declines ahead.
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Tomorrow we'll get the latest inflation figures for the March quarter of 2024, which are likely to show a continuation of the ongoing disinflationary trend in Australia.
I'll update all the latest inflation charts then.
Return to office
JLL's latest figures showed that the first quarter of 2024 was characterised by net absorption of 33,000 square metres of office space (the reverse was true in the last quarter of 2023, when net absorption was -58,700 square metres).
There's definitely been a flight to quality, and the capital city office vacancy rate remains elevated at 14.7 per cent, but this does provide some reasonably compelling evidence that the sector will ultimately rebalance.
JLL reported that almost all relocating businesses moved to higher quality office space and locations to capitalise on the weakness in the sector.
Sydney recorded the strongest net absorption in Q1 2024 at 13,500 square metres, driven by prime grade assets, as capital city businesses pushed their return-to-office rates harder.
Melbourne has also reported positive absorption and has seen an increase in CBD pedestrian activity in 2024.
Booming Brisbane recorded positive net absorption for the 8th consecutive quarter.
Office completions for 2025 and 2026 are expected to be around half of normal levels, which will also assist with the rebalancing across the office sector.
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