The ABS released the latest retail turnover data, which rose 0.3 per cent in April 2018 following a rise (0.3 per cent) in March 2018. Compared to April 2017 the trend estimate rose 2.6 per cent. The less reliable seasonally adjusted turnover rose 0.4 per cent in April 2018, seasonally adjusted, which follows a relatively unchanged result (0.0 per cent) in March 2018.
Across the categories, food retailing was up 0.4%, household good up 4%, other retailing 0.2%, Cafes and takeaway food 0.1%, department stores down 0.1%, clothes and footwear down 0.2%.
Across the states, the trends were strongest in NT up 0.7%, ACT up 0.6%, NSW and VIC up 0.4%, TAS up 0.2%, QLD 0.1% and SA fell 0.1%.
Online retail turnover contributed 5.4 per cent to total retail turnover in original terms in April 2018, a rise from 5.1 per cent in March 2018. In April 2017 online retail turnover contributed 3.4 per cent to total retail.
The ABS reports that the number of dwellings approved in Australia fell by 0.1 per cent in April 2018 in trend terms. We see a fall in units, somewhat offset by a rise in houses approved. The seasonally adjusted numbers show a more significant drop.
“The total dwellings series has been relatively stable for the past eight months, with around 19,000 dwellings approved per month,” said Justin Lokhorst, Director of Construction Statistics at the ABS. “The strength in approvals for houses is being offset by weakness in semi-detached and attached dwelling approvals.”
Among the states and territories, dwelling approvals fell in April in Tasmania (3.7 per cent), Victoria (2.3 per cent) and Western Australia (2.2 per cent) in trend terms.
Dwelling approvals rose in trend terms in the Australian Capital Territory (14.8 per cent), the Northern Territory (6.7 per cent), South Australia (1.7 per cent), New South Wales (0.9 per cent) and Queensland (0.7 per cent).
In trend terms, approvals for private sector houses rose 0.9 per cent in April. Private sector house approvals rose in Queensland (1.6 per cent), Victoria (1.5 per cent) and New South Wales (0.6 per cent), but fell in Western Australia (0.9 per cent) and South Australia (0.4 per cent).
In seasonally adjusted terms, total dwellings fell by 5.0 per cent in April, driven by a 11.5 per cent decrease in private sector dwellings excluding houses. Private sector houses rose 0.1 per cent in seasonally adjusted terms.
The value of total building approved fell 0.7 per cent in April, in trend terms, and has fallen for six months. The value of residential building fell 0.5 per cent while non-residential building fell 1.0 per cent.
The HIA managed to put a positive spin on the results saying “Detached House Approvals Strongest in 15 Years”.
The performance of the detached house building market is remarkable. The volume of house approvals during the three months to April was 9.9 per cent higher than a year ago – a time when it was already elevated,” said Shane Garrett, HIA’s Senior Economist.
Strong demand for new houses is being sustained by healthy rates of population growth – itself a product of robust labour markets in Australia’s largest cities. While it’s a virtuous circle for detached house building at the moment, there are risks on the horizon.
The employment and wage data from the ABS last week was not flash, with job growth momentum easing, unemployment higher and wages growth continuing at glacial speed.
So its worth asking what is really going on under the hood. To do that we have looked at ABS data over the last decade to drill into the detail. And frankly its not pretty.
First we looked at employment across the industry sectors. Health care leads the way now at 14.2%, in terms of the number of people employed, followed by retail at 11.1%, education and training at 9.2% and manufacturing at 7.9%. For comparison purposes, about 12 % of the U.S. workforce is employed in the health care sector.
Then we compared the relative distribution by industry groups now, and back in 2005. Over that decade or so there has been a considerable shift in industry distribution.
The fastest growing sector in Health care, which have expanded relatively by 2.7%. The next largest growth sector was Professional and Technical Services at 1.4% and Mining at 1.3%. Construction grew relatively by 1.1%. At the other end of the spectrum, Manufacturing fell by a massive 4.3%, followed by Retail down 1.2% and information technology and media down 0.5%.
Or in other words, relativity more people are working in the health care sector than a decade ago. Drilling further into the data we also see a significant rise in the number of females working in this sector, as well as significant growth in part-time employment in the sector.
The final piece of analysis looks at relative weekly income across specific industry sectors. More than half of all people working in retail earn less than $600 a week. More than half of people in the healthcare sector earn less than $800 a week. Half the average of all industry sectors earns less than $1,000 a week, whilst half of those in the resource and mining sector earn more than $1,800 a week. So Retail and Health care sectors are intrinsically low paid.
Now lets put that together. All this goes some way to explain the shifts in employment and income. The health care sector has been an important generator of jobs in recent years, and health care is expected to continue to expand employment in coming years, but the jobs will continue to shift to low-paying support occupations reflecting changing demographics and greater demand. About 40 percent of the sector’s workers are not directly involved in treating a patient; instead, they work in jobs such as office or administrative work and food preparation. Others are working in health support occupations like home care and personal assistance. These jobs are paid significant less than care practitioners.
But, the health care sector is more labour intensive than other sectors, such as manufacturing, and this translates into a relatively lower share of output. So growth in health care does not guarantee broad-based prosperity because beyond the high pay of health care practitioners, the health care jobs in highest demand pay lower-than-average wages.
In fact the truth is the growth in jobs are in sectors which are service industries, and these to not really create new value, they simply circulate money in the system , perhaps from superannuation savings to pay for medical care.
Thus the growth in jobs in not assisting overall economic growth, and the lower average wages is depressing overall wage growth. Workers in the health care sector are also less likely to press hard for pay rises.
So the bottom line is we have a structural problem in the economy, where more people are doing important work helping those needing health care assistance, but the overall economic contribution impact is net negative, hence the low GDP growth and wages growth. Or in other words, more jobs are not necessarily good or well paid jobs. And that’s a structural problem, given the current demographic shifts. Welcome to the bed pan economy.
The latest data from the ABS covers April 2018 employment. The trend unemployment rate rose from 5.53 per cent to 5.54 per cent in April 2018 after the March figure was revised down, while the seasonally adjusted unemployment rate increased 0.1 percentage points to 5.6 per cent. In fact employment growth is stalling.
The trend participation rate increased to a further record high of 65.7 per cent in April 2018 and in line with the increasing participation rate, employment increased by around 14,000 with part-time employment increasing by 8,000 persons and full-time employment by 6,000 persons in April 2018. This continued the recent slowing of employment growth, particularly full-time employment growth. and the seasonally adjusted labour force participation rate increased slightly to 65.6 per cent.
Over the past year, trend employment increased by 355,000 persons or 2.9 per cent, which was above the average year-on-year growth over the past 20 years (2.0 per cent).
The trend hours worked increased by 4.7 million hours or 0.3 per cent in April 2018 and by 3.3 per cent over the past year.
Over the past year, the states and territories with the strongest annual growth in trend employment were New South Wales (3.8 per cent), Queensland (3.5 per cent) and the Australian Capital Territory (2.7 per cent). But unemployment is highest in WA at 6.4 per cent, QLD 6.3 per cent, TAS 6.0 per cent and SA at 5.9 per cent.
The critical perspective is looking at underutilisation – or those in work who want more work. This is essentially unused space capacity. The latest data for April shows the highest rate of underutilisation resides in WA (where unemployment is also highest). TAS and SA are also quite high, while VIC and ACT have the lowest rates.
And the trends really have hardly improved at all, taking account of seasonal variations.
It is this underutilisation which explains the relatively how unemployed number, and the low wage growth we discussed yesterday.
Finally, it is worth noting that as the ABS shift their samples, as they do each quarter, there is some variability in the baseline data, which introduces statistical noise into the system.
But the bottom line is there is nothing here to suggest we are going to see unemployment falling below 5%, which many believe is the rate at which wages growth may start to trend higher.
We are trapped in a low growth, low wage, high underutilised situation, and there is no easy way out given the current economic settings.
In fact you can mount an argument the federal budget is already shot as a result.
The seasonally adjusted Wage Price Index (WPI) rose 0.5 per cent in March quarter 2018 and 2.1 per cent through the year.
Seasonally adjusted, private sector wages rose 1.9 per cent and public sector wages grew 2.3 per cent through the year to March quarter 2018.
In original terms, through the year wage growth to the March quarter 2018 ranged from 1.4 per cent for the Mining industry to 2.7 per cent for the Health care and social assistance industry.
Victoria and Tasmania both recorded the highest through the year wage growth of 2.3 per cent and the Northern Territory recorded the lowest of 1.1 per cent.
And bear in mind this weak result comes despite the Fair Work Commission’s June 2017 decision which lifted the minimum wage 3.3% and to $18.29 from July and flowed to ~2.3 million workers. This means the annual wages growth number contains this artificial artifact which means the underlying would be even lower.
And by the way you can argue this metric overstates the true picture as we see a lift in low paid jobs away from higher paid areas, like mining, and the ABS data does not adjust for this.
For comparison, the Average Compensation of Employees from the national accounts which is to December 2017 is tracking even lower circa 1.3%.
The ABS released their housing finance data today to March 2018. The trends are pretty clear, lending is slowing, and bearing in mind our thesis that lending and home prices are inextricably linked, this signals further home price falls ahead, which will be exacerbated by even tighter lending standards we think are coming. Debt is still rising faster than inflation or wages.
Starting with the original first time buyer data we see a rise in volumes, reflecting the incentives in NSW and VIC. On a rolling average basis, volumes are strongest in VIC.
Overall volumes were 17.4% of new loans written compared with 17.9% in February, which is a little higher than 2016, but is appears to be drifting lower now, suggesting that ahead volumes of new loans may fall a little.
Looking at the FTB month on month movements, we see a 5.9% uplift in flows which equates to an extra 515 loans last month. The average loan size rose by 2.3% to$335,400.
Looking at our overall first time buyer tracker, we see a fall in overall volumes, as the number of first time buyer investors falls away, as captured in our household surveys.
Turning to the 12 month rolling trend, we see that both owner occupied and investor loan flows are slowing, with investor lending shrinking faster.
The proportion of investor loan flows slid again (excluding refinance) to 43.6%.
Looking in more details at the moving parts, in trend terms, lending for owner occupied construction fell 1.1%, owner occupied purchase of new dwellings fell 0.2%, and purchase of other established dwellings rose 0.2%. So overall, owner occupied lending flows, excluding refinance, were flat at $14.8 billion.
Refinance of existing owner occupied loans rose by 0.5% to $6.4 billion, and on the investor side, construction of new property for investment purposes fell 3.8%, purchase of existing property for investment purposes fell 0.7% and purchase of existing property for investment by other entities (e.g. super funds) fell 0.2%. So overall investment flows fell 0.9% to $11.5 billion.
Finally, the total of all finance trend fell overall 0.2% to 32.7 billion.
And in original terms, the stock of all housing loans rose $6.7 billion, or 0.4% in the month, which equates to 4.9% annualised, still well above inflation or wages growth which is at 2%.
So, the overall growth of lending for housing is still sufficient to lift household debt even higher. So far from losing lending controls, regulators should be seeking to tighten further. There is no justification for growth above inflation or wages, because stronger momentum will only lift the burden on households even further, and inflate the banks’ balance sheets, which flatters their performance.
Ben James, ABS Director of Quarterly Economy Wide Surveys, said: “While there was a rise in food retailing of 0.7 per cent in March 2018 all other industries fell – cafes, restaurants and takeaways (-0.8 per cent) led the falls, but other retailing (-0.6 per cent), household goods retailing (-0.3 per cent), department stores (-0.5 per cent) and clothing, footwear and personal accessory retailing (-0.2 per cent) also fell.”
In seasonally adjusted terms, there were falls in New South Wales (-0.1 per cent), Queensland (-0.2 per cent), Western Australia (-0.1 per cent) and Tasmania (-0.3 per cent). Retail trade in Victoria (0.2 per cent), the Australian Capital Territory (1.5 per cent), South Australia (0.2 per cent) and the Northern Territory (0.1 per cent) rose.
Our preferred trend estimate for Australian retail turnover rose 0.3 per cent in March 2018, following a rise (0.3 per cent) in February 2018. Compared to March 2017, the trend estimate rose 2.6 per cent.
By state, NSW rose 0.3%, VIC. 0.5%, QLD 0.1%, SA 0.1%, WA 0.00%, NT 0.3% and ACT 0.4%.
Online retail turnover contributed 5.1 per cent to total retail turnover – up from 3.7 per cent a year ago – in original terms in March 2018.
In seasonally adjusted volume terms, turnover rose 0.2 per cent in the March quarter 2018, following a rise of 0.8 per cent in the December quarter 2017. The rise in volumes was led by food (0.7 per cent), household goods (1.2 per cent) and clothing, footwear and personal accessories (1.1 per cent).
The number of dwellings approved in Australia rose in March 2018 in trend terms, with a 0.2 per cent rise.
This is being driven by approvals for private sector houses, which have now risen for 13 consecutive months. They are now at their highest level since 2003, in trend terms.
Approvals for private sector houses rose 0.8 per cent in March. Private sector house approvals rose in Victoria (1.8 per cent) and Queensland (1.5 per cent), but fell in Western Australia (2.1 per cent) and New South Wales (0.2 per cent). Private house approvals were flat in South Australia.
But units continue to fall, so overall the biggest trend increase in dwelling approvals in March was in the Australian Capital Territory (28.0 per cent), followed by the Northern Territory (5.3 per cent) and Queensland (2.3 per cent).
There were falls in trend terms in Western Australia (6.7 per cent), Tasmania (4.8 per cent), Victoria (0.5 per cent), New South Wales (0.2 per cent) and South Australia (0.1 per cent).
In seasonally adjusted terms, total dwellings rose by 2.6 per cent in March, driven by a 6.1 per cent increase in private sector dwellings excluding houses. Private sector houses rose 1.1 per cent in seasonally adjusted terms.
The value of total building approved fell 0.6 per cent in March, in trend terms, and has fallen for six months. The value of residential building rose 0.4 per cent while non-residential building fell 2.5 per cent.
The latest ABS data, out today shows that the Consumer Price Index (CPI) rose 0.4 per cent in the March quarter 2018, the latest Australian Bureau of Statistics (ABS) figures reveal. This follows a rise of 0.6 per cent in the December quarter 2017.
The CPI rose 1.9 per cent through the year to the March quarter 2018 having increased 1.9 per cent through the year to the December quarter 2017. Housing was more than 3% over the past year and health costs more than 4%.
The most significant price rises this quarter are secondary education (+3.3%), gas and other household fuels (+6.0%), pharmaceutical products (+5.6%), vegetables (+3.7%) and medical and hospital services (+1.5%). These price rises were partially offset by falls in international holiday travel and accommodation (-2.4%), audio, visual and computing media and services (-6.1%) and furniture (-2.8%).
Looking across the states, the 1.9% average masks significant variations, with Sydney and Melbourne above 2% and Canberra 2.4%.
For the March quarter 2018, the All Groups annual percentage change of the Weighted Average of the Eight Capital Cities is +1.9 per cent. Sydney rose 2.1 per cent, Melbourne rose 2.2 per cent, Brisbane rose 1.7 per cent, Adelaide rose 2.3 per cent, Perth rose 0.9 per cent, Hobart rose 2.0 per cent, Darwin rose 1.1 per cent, and Canberra rose 2.4 per cent.
We think “real life” prices increases are significantly higher, due to the impact of housing and health costs in particular.
The trend unemployment rate increased slightly to 5.6 per cent in March 2018. The trend participation rate increased to a record high of 65.7 per cent in March 2018.
“The labour force participation rate now sits at 65.7 per cent, the highest it has been since the series began in 1978, indicating that the population is participating in the labour market at a record high level,” the Chief Economist for the ABS, Bruce Hockman, said.
In line with the increasing participation rate, employment increased by around 14,000 persons. Part-time employment increased by 13,000 persons and full-time employment by 1,000 persons, reflecting a slowing in full-time employment growth.
Over the past year, trend employment increased by 3.1 per cent, which was above the average year-on-year growth over the past 20 years (1.9 per cent).
The trend monthly hours worked increased by 0.2 million hours (0.01 per cent), with the annual figure sitting at 2.6 per cent. The trend unemployment rate increased slightly to 5.6 per cent in March 2018.
“The unemployment rate has continued to be relatively constrained over the past year, and is still hovering around 5.5 to 5.7 per cent”, Mr Hockman said. Over the past year, the states and territories with the strongest annual growth in trend employment were Queensland (4.3 per cent), the ACT (3.9 per cent), and New South Wales (3.6 per cent).
WA has the highest, and still rising trend employment rate at 6.4%
The seasonally adjusted number of persons employed increased by 5,000 in March 2018. The seasonally adjusted unemployment rate remained at 5.5 per cent after the February number was revised down, and the seasonally adjusted labour force participation rate decreased slightly to 65.5 per cent.
Across the states, the trends were strongest in NT up 0.7%, ACT up 0.6%, NSW and VIC up 0.4%, TAS up 0.2%, QLD 0.1% and SA fell 0.1%.
Online retail turnover contributed 5.4 per cent to total retail turnover in original terms in April 2018, a rise from 5.1 per cent in March 2018. In April 2017 online retail turnover contributed 3.4 per cent to total retail.
