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Friday 16

November, 201810:57 PM



Record job vacancies

Record job vacancies

Total household wealth (net worth) fell for the first time in two years, down just 0.4 per cent to $10,222.8 billion at the end of March 2018.

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28.06.2018 04:33 PM

Record job vacancies; Wealth tops out
Financial Accounts; Job Vacancies

Wealth: Total household wealth (net worth) fell for the first time in two years, down just 0.4 per cent to $10,222.8 billion at the end of March 2018. In per capita terms, wealth eased from a record $414,277 to $410,708 in the March quarter.

Foreign share holdings: Foreigners held $557.4 billion of Aussie shares in the March quarter, down from $582.5 billion in the December quarter.

Job vacancies: Job vacancies rose by 5.7 per cent to a record 236,000 in the three months to May. Job vacancies are up by 24.1 per cent on a year ago – the strongest annual growth rate 7½ years. And vacancies in the previous quarter to February were revised up to 5.4 per cent or 223,300, from 4.4 per cent or 220,900. 

What does it all mean?

The Finance & Wealth publication from the Bureau of Statistics contains the most complete figures on household finances. And for the first time in two years wealth eased slightly. This hardly comes as a surprise – home prices eased in the quarter and the losses weren’t made up elsewhere, such as on the sharemarket.

On average, each Australian has net assets (assets less liabilities) of just over $410,000, a total that has lifted by over $9,000 in the past year. And over the past five years per capita wealth has lifted by more than $100,000 or 36 per cent. It is clear that household balance sheets remain solid.

Looking ahead home prices are likely to ease further from record levels. The $64 question is whether gains on the sharemarket will offset the reduced valuations of Australian homes. Per capita wealth may consolidate near $400,000 after tremendous gains over the past five years.

Jobs are being created predominantly in the services sector, Australia’s economic growth engine. And jobs growth over the past year has been particularly strong in the Health and Social Assistance, Construction, Manufacturing and Professional Services sectors. And job vacancies in Mining rebounded by almost 10 per cent in the three months to May.

Weakness is only evident in the “Other Services”, Transport Services and Public Administration industries where jobs have declined over the year. A retracement in Retail Trade job vacancies is an area to watch, given technological disruption and increased global competition.

Overall, employment is set to grow further with leading indicators such as job vacancies at record highs.

What do the figures show?
Financial Accounts:

Total household wealth (net worth) fell for the first time in two years, down just 0.4 per cent to $10,222.8 billion at the end of March 2018. In per capita terms, wealth eased from a record $414,277 to $410,708 in the March quarter. Wealth is still up $9,072.70 or 2.3 per cent over the year. 

The ABS noted: “Household liabilities outgrew assets during March quarter 2018, resulting in a decrease of 0.4 per cent in household net worth, falling from a 2.0 per cent rise last quarter. Household liabilities was the largest contributor to the decrease in household net worth, detracting 0.3 percentage points, followed by land and dwellings assets detracting 0.2 percentage points.

Households held a record $1,105.7 billion in cash and deposits at the end of March. Cash and deposit holdings represented 21.65 per cent of financial assets, down from 21.71 per cent in the December quarter but still just above the post global financial crisis (GFC) average of 21.16 per cent and the long-term average of 16.3 per cent.

Households held a record $939.3 billion in shares or 18.6 per cent of all financial assets, in line with the average since the global financial crisis.

Pension fund (superannuation fund) assets fell by $9.9 billion to $2,174.5 billion in the March quarter. Cash and deposits stood at 11.3 per cent of financial assets, below the 13.5 per cent average since the global financial crisis, but above the long-term average of 9.4 per cent.

Foreigners held $557.4 billion of Aussie shares in the March quarter, down from $582.5 billion in the December quarter. Foreigners held 30.5 per cent of total listed shares (long-term average 32.9 per cent).

Job vacancies:

Job vacancies rose by 5.7 per cent to a record 236,000 in the three months to May. Job vacancies are up by 24.1 per cent on a year ago – the strongest annual growth rate for 7½ years.

In original terms, quarterly changes in vacancies across states and territories were: NSW (down 2.0 per cent); Victoria (up 8.2 per cent); Queensland (down 10.4 per cent); South Australia (up 9.6 per cent); Western Australia (up 8.6 per cent); Tasmania (down 17.2 per cent); Northern Territory (up 5.4 per cent) and ACT (up 6.0 per cent).

In original terms, annual changes in vacancies across states and territories were: NSW (up 10.7 per cent); Victoria (up 51.6 per cent); Queensland (up 20.3 per cent); South Australia (up 9.6 per cent); Western Australia (up 26.2 per cent); Tasmania (down 11.1 per cent); Northern Territory (up 25.8 per cent) and ACT (up 24.6 per cent).

Vacancies rose by 2,700 or 1.2 per cent in original terms over the three months to May. In terms of industries, 11 of the 18 industries had increased vacancies. Vacancies rose the most in Administrative & Support services (up 5,500), Professional and Technical Services (up 2,300), and Public Administration & Safety (up 2,200). Vacancies fell by the most in Retail Trade (down 3,800) and Accommodation and Food Services (down 3,200). Vacancies were unchanged for Arts and Recreation.

Vacancies rose by 43,900 or 24.1 per cent in original terms over the year to May. In terms of industries, 15 out of 18 industries reported more vacancies. Vacancies rose the most in Administrative & Support services (up 16,500), Professional, Scientific and Technical Services (up 8,200) and Construction (up 3,000). But vacancies fell for Retail Trade (down 1,900), Rental, Hiring and Real Estate (down 600) and were unchanged for Other Services.

By sector, private sector job vacancies rose by 5.7 per cent over the three months to May and by 25.7 over the year. Vacancies in the public sector rose by 5.1 per cent in the three months to May and increased by 9.6 per cent from a year ago.

What is the importance of the economic data?

The Australian Bureau of Statistics releases the Financial Accounts publication each quarter. The data covers assets, liabilities and financial flows for the key sectors of the economy. Figures on financial wealth help reveal the true state of household finances.

The Australian Bureau of Statistics releases Job Vacancies data each quarter. The data is useful in gauging the strength of the job market.

What are the implications for interest rates and investors?

With wages tracking closely in line with prices and wealth now easing, there will be continued uncertainty about future spending by Australian families. In other words, just another reason to leave cash rates on hold.

The strength in the job market will slowly lead to higher wages and prices.

CommSec expects official rates to remain stable until early 2019.

Published by Craig James, Chief Economist, CommSec
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