- The number of newspaper job advertisements increased by 2.2% in July, sending the level of job ads to yet a new record
high. The number of ads placed in July was 7.8% higher than a year earlier.
- Continued strength in job ads suggests that the stronger than expected momentum in the labour market during Q2 looks
likely to have continued into Q3. With population growth still weak and labour force participation rates moving close to
cyclical highs, even moderate rates of employment growth compared to that recorded in Q2 would likely push the
unemployment rate lower. We expect the unemployment rate to decline to 5% in Q3 and a further decline to below 5% by
year-end seems entirely plausible.
- A turnaround in migration trends, if sustained, will likely alleviate skill shortages in specific sectors, and would
be positive for the economy over the long term. However, in our view, the short to medium term impact of a return to
positive net migration inflows - especially strong inflows - would be to exacerbate skill shortages and inflation
pressures at a more general level. As the experience of the mid-1990s demonstrated, migrants tend initially to
contribute more to aggregate demand than to aggregate supply, reflecting the initial set up costs that they incur
(notably, the need to find and furnish accommodation).