The Bull

Saturday 22

September, 201811:11 PM



Job ads at 7-yr highs

Job ads at 7-yr highs

ANZ Job Advertisements rose by 1.5 per cent in May after declining by a downwardly revised 0.3 per cent (previously: -0.2 per cent) in April. Job ads are up 11.5 per cent on a year ago.

Share |

04.06.2018 04:18 PM

Job advertisements at 7-year highs
Job Advertisements; Retail trade

Job advertisements: ANZ Job Advertisements rose by 1.5 per cent in May after declining by a downwardly revised 0.3 per cent (previously: -0.2 per cent) in April. Job ads are up 11.5 per cent on a year ago. The number of jobs advertised (seasonally adjusted) was 179,245 in May – the strongest level in seven years.

Monthly retail trade: Retail trade rose by 0.4 per cent in April after a flat outcome in March and a 0.6 per cent increase in February. Annual spending growth fell from 3.2 per cent to 2.6 per cent.

What does it all mean?

The Aussie job market is in rude health. Over 332,000 jobs have been created over the past year (to April). An average of 27,700 jobs per month have been generated in the 12 months to April.

Annual employment growth peaked in January (431,200) – the strongest annual gain on record. And while the pace of jobs growth is likely to slow from the break-neck speeds recorded in 2017, leading indicators suggest that the labour market will remain buoyant. Job ads are at the strongest level in seven years and skills shortages are emerging in some industries.

Job security is improving for most Aussies, supporting household consumption. That said, modest wage gains, rising utilities bills, lofty petrol prices, elevated mortgage debt and falling home prices continue to constrain households. Retail spending, whilst only comprising 30 per cent of total household consumption, can best be described as “ok”.

Today’s retail sales report was better-than-expected. The report served to highlight that Aussies are preferring “experiences” when spending – a trend that CommSec has been highlighting in its monthly Business Sales Indicator report for several months. Spending at cafes, restaurants and takeaways is elevated.

Not surprisingly, traditional bricks and mortar department stores remain under pressure. Annual spending at department stores fell by 3.7 per cent in April – the equal worst outcome in 18 months.

The consumer stampede towards online spending continues. Aussie consumers spent around $25.8 billion on online retail sales over the 12 months to April according to NAB. It’ll be interesting to see whether the Turnbull government’s 10 per cent GST levy on goods bought for less than $1,000 from overseas sellers (effective July 1) will have any impact on internet purchases.

What do the figures show?
Job advertisements

ANZ Job Advertisements rose by 1.5 per cent in May after declining by a downwardly-revised 0.3 per cent (previously: - 0.2 per cent) in April. Job ads are up 11.5 per cent on a year ago. 

The number of jobs advertised (seasonally adjusted) was 179,245 in May – the strongest level in seven years. 

Retail trade

Retail trade rose by 0.4 per cent in April after a flat outcome in March and a 0.6 per cent increase in February. Annual spending growth fell from 3.2 per cent to 2.6 per cent.

Non-food retailing rose by 0.5 per cent in April to be up 2.1 per cent over the year.

Spending rose most in April for Cafes, restaurants and takeaways (up by 1.3 per cent), followed by Other retailing (up by 0.9 per cent), Household goods retailing (up by 0.7 per cent) and Food retailing (up by 0.3 per cent).

Spending fell the most for Department stores (down by 0.9 per cent) and Clothing, footwear and personal accessories (down by 0.8 per cent).

Spending rose across most Australian states and territories in April: NSW (up by 0.7 per cent); Victoria (up by 0.3 per cent); Queensland (up by 0.1 per cent); Western Australia (up by 0.7 per cent); Tasmania (up by 0.9 per cent); NT (up by 2.6 per cent); ACT (up by 0.6 per cent). But South Australian sales declined by 0.6 per cent.

Sales by chain-store retailers and other large retailers fell by 0.1 per cent in April. Annual growth fell from 5.6 per cent to 3.6 per cent.

What is the importance of the economic data?

The Bureau of Statistics’ Retail trade publication contains the most current readings on the performance of consumer spending. The ABS surveys 500 ‘larger businesses’ and 2,750 ‘smaller businesses’. Retail trade covers spending at a broad range of retail outlets but excludes both petrol and motor vehicle sales. A weak retail trade result may point to a slowing economy as well weighing on the share prices of listed retail stocks. But retail trade estimates can’t be assessed in isolation – it is important to look at the influences determining future trends in consumer spending, such as income, employment and confidence levels.

The monthly Job Advertisements release is a leading employment indicator. Employers only seek additional staff if business activity is strong, and more importantly, if they expect that conditions will remain favourable in coming months. It takes around 5-6 months for the new staff to be added to the payrolls. But a fall in job advertisements would have a more immediate impact on monthly employment estimates.

What are the implications for interest rates and investors?

Consumers are confident, business conditions are the best on record, governments are spending and interest rates remain low. And the labour market is likely to strengthen further. Job advertisements are the best in seven years.

Traditional retailers, such as large department stores, continue to struggle as consumers spend their cash in different ways, preferring “experiences” (largely services) over physical goods.

Cafes, restaurants and bars in Aussie capital cities are heaving, supporting spending. Annual Victorian retail sales are particularly buoyant on the back of strong jobs and population growth. However, annual retail spending in NSW has remained below 3 per cent for eight consecutive months, coinciding with the decline in Sydney property prices.

More broadly, aggressive global competition remains significant, keeping goods prices in check. CommSec expects official interest rates to be stable until early 2019.

Published by Ryan Felsman, Senior Economist, CommSec
Archive
Markets
Index: Points Change Percent

PLEASE SUPPORT OUR SPONSORS, AUSTRALIA'S LEADING BROKERS:



© Copyright TheBull.com.au. All rights reserved.