Tag: ABS

Trend unemployment rate lowest in 4 years

The monthly trend unemployment rate has decreased by 0.2 per cent over the past year to 5.5 per cent in September 2017, according to figures released by the Australian Bureau of Statistics (ABS) today. This is the lowest rate seen since March 2013 and reflects the strength in employment growth over the past 12 months.

But it is worth noting the underemployment trend rate (proportion of employed persons) rate still does not look that flash, especially in TAS, SA and WA.

“The trend unemployment rate had been hovering in the range of 5.6 to 5.8 per cent for almost two years, but has now dropped to a four year low of 5.5 per cent,” the Chief Economist for the ABS, Bruce Hockman, said.

The trend monthly unemployment rate for both males and females dropped to 5.5 per cent, also for the first time since March 2013.

The trend participation rate remained steady at 65.2 per cent. The male participation rate was 70.8 per cent, while the female participation rate reached a record high of 59.9 per cent.

Monthly trend full-time employment increased for the 12th straight month in September 2017. Full-time employment grew by a further 16,000 persons in September, while part-time employment increased by 8,000 persons, underpinning a total increase in employment of 24,000 persons.

“Full-time employment has now increased by around 271,000 persons since September 2016, and makes up the majority of the 335,000 person net increase in employment over the period,” Mr Hockman said.

Over the past year, trend employment increased by 2.8 per cent, which is above the average year-on-year growth over the past 20 years (1.9 per cent).

Over the past year, the states with the strongest annual growth in employment were Queensland (4.1 per cent), Tasmania (3.9 per cent), Victoria (3.1 per cent) and Western Australia (2.9 per cent).

The trend monthly hours worked increased by 3.1 million hours (0.18 per cent), with the annual figure also showing strong growth (2.9 per cent).

Trend series smooth the more volatile seasonally adjusted estimates and provide the best measure of the underlying behaviour of the labour market.

The seasonally adjusted number of persons employed increased by 20,000 in September 2017. The seasonally adjusted unemployment rate decreased by 0.1 percentage points to 5.5 per cent and the labour force participation rate remained steady at 65.2 per cent.

Finance Overall Lifted Again In August

The ABS released their final piece of the finance jig-saw today, Lending Finance to August 2017.   As normal we look at the trend data, which smooths out some of the statistical bumps.

Total credit lifted again, in flow trend terms, up 0.2%.

Investment mortgage flows were up 0.2% (flat in Sydney, and still rising in Melbourne) and made up 10.2% of all credit, the same as last month. Lending for other commercial purposes rose 0.5% while revolving commercial credit fell 1.7%. Lending for personal finance rose 0.5%, as households reach for more credit to assist their cash flows.

The total value of owner occupied housing commitments excluding alterations and additions rose 0.9% in trend terms.

The trend series for the value of total personal finance commitments rose 0.5%. Revolving credit commitments rose 0.8% and fixed lending commitments rose 0.4%.

The trend series for the value of total commercial finance commitments was flat. Fixed lending commitments rose 0.4% while revolving credit commitments fell 1.7%.

The trend series for the value of total lease finance commitments rose 1.5% in August 2017 while the seasonally adjusted series fell 0.6%, following a 6.8% fall in July 2017.

Households Spending Less On Housing…But

Data from the ABS today – Housing Occupancy and Costs – highlights the average household with an owner occupied mortgage is paying around $450 a week, slightly lower than the peak a couple of years ago.  This equates to around 16% of gross household income, on average.

This does not include repayments on investment properties of course (and many households have multiple properties as investing in property rises).

But of course, the true story is interest rates have fallen to all time lows, allowing people to borrow more, as prices rise. As a result, should interest rates start to bite, this will cause real pain. Then of course we have recent flat wage growth, in real terms, in the past couple of years.

Also, households have a bigger mortgage for longer, which is great for the banks, but not helpful from a household perspective, as it erodes savings into retirement and more older Australians are still borrowing. And of course the current high home prices show a paper profit, but that could be eroded if prices slide.

Thus, the ABS data should not be interpreted as everything is fine, it is not! In fact, underwriting standards should be much tighter now, as we highlighted this morning, Australian Banks are willing to go up to around 6 times income, higher than many other countries, with similar home price bubbles.

The proportion of income mortgagees are using for housing has declined over the last decade, according to new figures released today by the Australian Bureau of Statistics (ABS).

“In 2005-06, owners with a mortgage paid 19 per cent of their total household income on housing costs. By 2015-16 this had fallen to 16 per cent. This is likely driven by lower interest rates coupled with growth in household incomes over the last decade, ” Dean Adams, Director of Household Characteristics and Social Reporting, said.

In 2005-06, owners with a mortgage paid $434 per week in housing costs, similar to the $452 paid in 2015-16 in real terms. But over the same period, average total household incomes for mortgagees rose from $2,272 to $2,759 per week.

“Mortgage and property values have also increased in the last decade. Ten years ago, the real median mortgage value was $171,000 which rose to $230,000 in 2015-16. Meanwhile, the real median dwelling value increased from $449,000 to $520,000,” Mr Adams explained.

Going back another decade, the results also reveal that households are entering into a mortgage at older ages. The proportion of younger households (with a reference person aged under 35 years) represented 69 per cent of first home buyers in 1995-96 which dropped to 63 per cent by 2015-16.

“Having a mortgage is now the most common form of ownership for households whose reference person was aged between 35 and 54 years. Among this group, ownership with a mortgage increased by 15 percentage points over the last two decades, from 41 per cent to 56 per cent. Meanwhile, the rate of outright ownership in 2015-16 (12 per cent) was one-third the 1995-96 rate (36 per cent),” Mr Adams said.

The rate of older households (with a reference person aged 55 years and over) who were still paying off a mortgage has tripled between 1995-96 and 2015-16 (from 7 per cent to 21 per cent). Older households are spending more of their income on housing costs than two decades ago, increasing from 8 per cent to 14 per cent for those aged between 55 and 64, and from 5 per cent to 9 per cent for those aged 65 and over.

First Time Buyers Lead Housing Finance Higher In August

Data from the ABS today on housing finance reconfirms what we already knew, overall lending flows for housing from the ADI’s rose 0.6% in trend terms or 2.1% seasonally adjusted. Within that, lending for owner occupied housing rose 0.9%, or 2.1% seasonally adjusted and investor loans rose 0.2% in trend terms, or a massive 4.3% in seasonally adjusted terms. So lending growth is apparent, and signals more household debt ahead.

First time buyers continue to extend their reach, despite we seeing “Peak Price” for property at the moment. In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments rose to 17.2% in August 2017 from 16.6% in July 2017. But these numbers may be wobbly, as the ABS warns:

The number of loans to first home buyers increased strongly in August. The ratio of the number of first home buyer loans to the total number of owner occupier loans also increased strongly. The increase has been driven mainly by changes to first home buyer incentives made in July by the New South Wales and Victorian governments. The ABS is working with financial institutions to establish the size of the increase in first home buyer lending in recent months. These numbers may be revised and users should take care when interpreting recent ABS first home buyer statistics. The ABS is continuing to work with APRA and the financial institutions to improve the quality of first home buyer statistics.

The number of investor first time buyers fell a little according to our surveys, but overall there are more active, thanks to the recent owner occupier incentives.

The overall lending flows, in trend terms revealed a rise in all categories, other than lending for new construction to investors, which fell just a little. Also refinanced loans only grew a little and continues to slide as a proportion of all loans. No real surprise as rates are rising now. The mix of loans also continues to pivot away from investment property, down to 44.8% of all loans (ex. refinance). Still a high number though.

Here are the month on month movements by category.

Looking at the original stock data, another $6.5 billion was added to the owner occupied category or 0.6%, while investor loans rose just 0.1% in the month.

The portfolio mix of investment loans drifted lower overall, down to 34.6% or $550 billion, while the total value of owner occupied loans stood at $1.1 trillion.

Residential Construction Rotates

The latest data from the ABS shows building construction activity to June 2017. We see a small rotation towards non-residential work, supported by investment from the public sector. The trend estimates, which irons out the bumps in the series, shows a rise in total building work done, with a fall in residential building of 1.2% and a rise in non-residential building of 2.8%.

Within the residential data, new houses fell 1.3% and other new residential building fell 1.0%.

The trend estimate of the value of total building work done rose 0.3% in the June 2017 quarter.

The trend estimate of the value of new residential building work done fell 1.2% in the June quarter. The value of work done on new houses fell 1.3% while new other residential building fell 1.0%.

The trend estimate of the value of non-residential building work done rose 2.8% in the June quarter.

The trend estimate for the total number of dwelling units commenced fell 3.0% in the June 2017 quarter following a fall of 2.8% in the March quarter.

The trend estimate for new private sector house commencements fell 1.6% in the June quarter following a fall of 2.7% in the March quarter.

The trend estimate for new private sector other residential building commencements fell 4.6% in the June quarter following a fall of 3.0% in the March quarter.

Retail Turnover On The Slide

More evidence of strained household budgets with the release today of the August 2017 ABS data on Retail Turnover.

Australian retail turnover fell 0.6 per cent in August 2017, seasonally adjusted, according to the latest Australian Bureau of Statistics (ABS) Retail Trade figures. This follows a fall of 0.2 per cent in July 2017.

In seasonally adjusted terms, there were falls in food retailing (-0.6 per cent), cafes, restaurants and takeaway food services (-1.3 per cent), household goods retailing (-1.0 per cent) and clothing, footwear and personal accessory retailing (-0.2 per cent). There were rises in department stores (0.7 per cent) and other retailing (0.1 per cent) in August 2017.

In seasonally adjusted terms, there were falls in all states and territories. “Victoria (-0.8 per cent) and Queensland (-0.8 per cent) led the falls,” said Ben James, Director of Quarterly Economy Wide surveys.

“There were also falls in New South Wales (-0.2 per cent), Western Australia (-0.6 per cent), South Australia (-0.6 per cent), the Australian Capital Territory (-0.8 per cent), Tasmania (-0.7 per cent) and the Northern Territory (-0.7 per cent).”

The trend estimate which irons out the bumps was a little more sanguine, with retail turnover rising 0.1 per cent in August 2017 following a 0.1 per cent rise in July 2017. Compared to August 2016, the trend estimate rose 2.8 per cent.

Some significant state variations, but overall direction is clearly down.

Online retail turnover contributed 4.6 per cent to total retail turnover in original terms.

More evidence of stressed household budgets, which is no surprise given the current economic settings.

Trend dwelling approvals rise 1.1 per cent in August

The number of dwellings approved rose 1.1 per cent in August 2017, in trend terms, and has risen for seven months, according to data released by the Australian Bureau of Statistics (ABS) today.

In trend terms, approvals for private sector houses rose 0.9 per cent in August. Private sector house approvals rose in Queensland (2.0 per cent), South Australia (1.4 per cent), Victoria (1.1 per cent) and Western Australia (0.3 per cent), but fell in New South Wales (0.3 per cent).

 

Dwelling approvals increased in August in the Australian Capital Territory (8.9 per cent), Northern Territory (8.3 per cent), Victoria (1.5 per cent), Tasmania (1.2 per cent), Queensland (1.0 per cent), South Australia (0.9 per cent) and New South Wales (0.7 per cent), but decreased in Western Australia (0.8 per cent) in trend terms.

“Dwelling approvals have shown signs of strength in recent months, although are still below the record high in 2016,” said Bill Becker, Assistant Director of Construction Statistics at the ABS. “The August 2017 data showed that the number of dwellings approved is now 6.5 per cent lower than in the same month last year, in trend terms.”

In seasonally adjusted terms, dwelling approvals increased by 0.4 per cent in August, driven by a rise in private dwellings excluding houses (4.8 per cent), while private house approvals fell 0.6 per cent.

The value of total building approved fell 0.3 per cent in August, in trend terms, after rising for six months. The value of residential building rose 0.7 per cent while non-residential building fell 1.8 per cent.

A Floor Under Property Price Falls

The ABS today released March 2017 demographic statistics, which shows that natural population growth is being dwarfed by net overseas migration. All these new households will need somewhere to live, so they be competing with existing residents for property, both in the rental sector, and for purchase. This is likely to put a floor under property demand and so home prices.

Bottom line, there is a strong link between home prices and population growth.  So, one lever which should be considered to take the sting out of the property cycle is to reduce net migration. Politically speaking, this appears unlikely as a “big Australia” strategy lays behind much of current public discourse.

The ABS says that the preliminary estimated resident population (ERP) of Australia at 31 March 2017 was 24,511,800 people. This is an increase of 389,100 people since 31 March 2016, and 126,100 people since 31 December 2016.

Within that, the preliminary estimate of natural increase for the year ended 31 March 2017 (142,400 people) was 5.8%, or 8,800 people lower than the natural increase recorded for the year ended 31 March 2016 (151,300 people).

The preliminary estimate of net overseas migration (NOM) for the year ended 31 March 2017 (231,900 people) was 26.9%, or 49,100 people higher than the net overseas migration recorded for the year ended 31 March 2016 (182,800 people).

Significantly, the state with the highest growth rate was Victoria, which is currently seeing the strongest auction clearance rates, strong demand, and home price growth. This is not a surprise, given the high migration

The ABS says Australia’s population grew by 1.6% during the year ended 31 March 2017. Natural increase and NOM contributed 36.6% and 59.6% respectively to total population growth for the year ended 31 March 2017 with intercensal difference accounting for the remainder. All states and territories recorded positive population growth in the year ended 31 March 2017. Victoria recorded the highest growth rate of all states and territories at 2.4%. The Northern Territory recorded the lowest growth rate at 0.1%.

 

Property Price Rises; It Depends

The latest ABS data on Residential Property Prices to Jun 2017 are out. They show considerable variations across the states, with Melbourne leading the charge, and Perth and Darwin languishing.

The price index for residential properties for the weighted average of the eight capital cities rose 1.9% in the June quarter 2017. The index rose 10.2% through the year to the June quarter 2017.

The capital city residential property price indexes rose in Sydney (+2.3%), Melbourne (+3.0%), Brisbane (+0.6%), Adelaide (+0.8%), Canberra (+1.3%) and Hobart (+1.8%) and fell in Perth (-0.8%) and Darwin (-1.4%).

Annually, residential property prices rose in Sydney (+13.8%), Melbourne (+13.8%), Hobart (+12.4%), Canberra (+7.9%), Adelaide (+5.0%) and Brisbane (+3.0%) and fell in Darwin (-4.9%) and Perth (-3.1%).

The total value of residential dwellings in Australia was $6,726,783.5m at the end of the June quarter 2017, rising $145,868.5m over the quarter.

The mean price of residential dwellings rose $12,100 to $679,100 and the number of residential dwellings rose by 40,000 to 9,906,100 in the June quarter 2017.

 

Trend Full-Time Employment Rate Still At 5.6%

Monthly trend full-time employment increased for the 11th straight month in August 2017, according to figures released by the Australian Bureau of Statistics (ABS) today.

The trend unemployment rate in Australia remained at 5.6 per cent in August 2017, and the labour force participation rate increased to 65.2 per cent, the highest it has been since April 2012.

The quarterly trend underemployment rate remained steady at 8.7 per cent over the quarter to August 2017 from a revised figure for May 2017 quarter.

“The underemployment rate is an important indicator of the spare capacity of workers in Australia, and it has remained at 8.7 per cent, a historical high, for the third consecutive quarter,” the ABS said.

The quarterly trend underutilisation rate, which includes both unemployment and underemployment, decreased by 0.1 percentage points to 14.2 per cent.

Trend series smooth the more volatile seasonally adjusted estimates and provide the best measure of the underlying behaviour of the labour market.

Full-time employment grew by a further 22,000 persons in August, while part-time employment increased by 6,000 persons, underpinning a total increase in employment of 27,000 persons.


“Full-time employment has now increased by around 253,000 persons since August 2016, and makes up the majority of the 307,000 person increase in employment over the period,” Chief Economist for the ABS, Bruce Hockman, said.

Over the past year, trend employment increased by 2.6 per cent, which is above the average year-on-year growth over the past 20 years (1.9 per cent).

The rate of employment growth (2.6 per cent) was greater than the growth in the population aged 15 years and over (1.7 per cent), which was reflected in an increase in the employment to population ratio (which is a measure of how employed the population is). This ratio increased by 0.6 percentage points since August 2016, up to 61.5. This is the highest it has been since February 2013.

Over the past year the three states and territories with the strongest growth in employment were Tasmania (4.0 per cent), Queensland (3.7 per cent) and Victoria (3.2 per cent).

The trend monthly hours worked increased by 3.9 million hours (0.23 per cent) to 1,708.6 million hours in August 2017.

The seasonally adjusted number of persons employed increased by 54,200 in August 2017. The seasonally adjusted unemployment rate remained steady at 5.6 per cent and the labour force participation rate increased to 65.3 per cent.