Tag: ABS

ABS Adjust Labour Force Stats Again

The ABS have now reworked the seasonally adjusted numbers, which effectively lifts the unemployment rate slightly.

In the time since the September 2014 labour force estimates were released, the ABS has systematically assessed the effects of each supplementary survey on the labour force estimates. Significant effects have been found for some supplementary surveys, with little or no measurable impact caused by others. As a result of this analysis, an approach has been developed to re-estimate the seasonality of the labour force data with specific adjustments made for the changed pattern of supplementary surveys. This approach will be adopted for the October 2014 labour force release and will result in revisions to the previously-estimated seasonally adjusted (and consequently the trend) results.

In practice, the new seasonal methods should be used to revise the seasonally adjusted estimates for every month in the labour force estimates (i.e. from February 1978 to October 2014). However, checking the consistency of every series from 1978 is not possible in the short time available (the seasonal adjustment process is based on adjusting at a detailed level and aggregating the component series to the totals for persons employed and unemployed) even though the impacts will be small for most months.

The most urgent need has been to resolve the problems in the last few months in the time series. Therefore, as an interim measure, the new approach has been used only from December 2013 to October 2014. In practice, the impact of this interim measure on the percentage changes in seasonally adjusted persons employed and unemployed between November and December 2013 is minimal.

The revised methodology will be applied in future months. In addition, work will continue on refining the methodology and verifying the changed seasonal factors for the full length of the monthly series. The ABS expects to revise all the seasonally adjusted data in conjunction with the annual seasonal reanalysis in early 2015.

The Labour Force Survey uses the concurrent seasonal adjustment method to derive seasonal factors. Concurrent seasonal adjustment uses data up to the current month to estimate seasonal factors for the current and all previous months. This process can result in revisions each month to estimates for earlier periods. However, in most instances, the only noticeable revisions will be to the seasonally adjusted estimates for the previous month and one year prior to the current month. Concurrent seasonal adjustment will continue to be used during the next few months. However, as an interim measure, any revisions to seasonally adjusted estimates will be restricted to the period from December 2013 onwards until the annual seasonal reanalysis is completed in early 2015.

Setting the seasonal factors to one for the seasonally adjusted unemployment estimates for July, August and September 2014 published on 9 October resulted in a slight downward bias in the number of persons unemployed and the unemployment rate for those three months. This was not observed in other series and has been rectified by the new seasonal analysis.

UNEMPLOYMENT RATE (TOTAL PERSONS) – SEASONALLY ADJUSTED
Month
Revised to be used in October 2014 publication
Presented in the September 2014 publication
%
%
June 2013
5.7
5.7
July 2013
5.6
5.7
August 2013
5.7
5.8
September 2013
5.7
5.7
October 2013
5.7
5.8
November 2013
5.8
5.8
December 2013
5.9
5.9
January 2014
6.0
6.0
February 2014
5.9
6.0
March 2014
5.8
5.8
April 2014
5.9
5.8
May 2014
5.9
5.9
June 2014
6.1
6.0
July 2014
6.1
6.0
August 2014
6.1
6.0
September 2014
6.2
6.1

 

Investors Burn Bright, First Time Buyers Sidelined (Again)

The monthly ABS housing finance data was released today for August. In a way, nothing new here, as first time buyers continue to be squeezed out, and investors dominate. The trend estimate for the total value of dwelling finance commitments excluding alterations and additions rose 0.3%. Investment housing commitments rose 0.9% while owner occupied housing commitments fell 0.1%. In seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations and additions fell 1.2%.

In trend terms, the number of commitments for owner occupied housing finance fell 0.2% in August 2014. In trend terms, the number of commitments for the purchase of established dwellings fell 0.3% and the number of commitments for the construction of dwellings fell 0.2%, while the number of commitments for the purchase of new dwellings rose 1.7%. In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments fell to 11.8% in August 2014 from 12.2% in July 2014.

Looking at the first time buyer data, we see they are lowest in NSW and VIC (where the investment market is hottest), but we also see down trends in WA and SA. This confirms our surveys that first time buyers cannot compete.

HousingFinancePC-FTBStateAugust2014Looking at investment lending we see that nearly 50% of all lending in August (if you exclude refinance) was for investment purposes.

HousingFinanceInvAugust2014

Seasonally Adjusted Employment Data Not Reliable – ABS

Today the ABS confirmed what we already knew, there was something weird about the employment data. When the last set came out, showing major and surprising movements, we highlighted the figures were probably not reliable. See the chart below.

UmeploymentAugust2014Now the ABS has said

The ABS has concluded that the seasonal pattern previously evident for the July, August and September labour force estimates is not apparent in 2014. This assessment was made while preparing labour force estimates for September 2014 and relates to all seasonally adjusted labour force estimates other than the aggregate monthly hours worked series.

As there is little evidence of seasonality in the July, August and September months for 2014, the ABS has decided that for these months the seasonal factors will be set to one (reflecting no seasonality). This means the seasonally adjusted estimates (other than for the aggregate monthly hours worked series) for these months will be the same as the original series and this will result in revisions to the previously published July and August seasonally adjusted estimates.

“It is critical that the ABS produces the best set of estimates that it can,” said acting Australian Statistician Jonathan Palmer “so that discussion is on what the estimates mean, and not the estimates themselves.

“To assist in this, the ABS will commission a review with independent external input to develop an appropriate method for seasonally adjusting October 2014 and following months’ estimates.

“The report on the results of this review will be presented in due course.”

The ABS has not made this decision lightly and believes this approach will result in a more meaningful set of seasonally adjusted estimates.

The ABS will continue to produce trend estimates and, as always, encourages users to use the trend estimates to help understand underlying movements in the labour force series.

This admission will increase the level of uncertainty about the accuracy of the data, at a time when unemployment and underemployment are set to remain high (as the IMF stated today). This is exacerbated by the recent cuts to the ABS budgets, making the sample smaller, and less reliable. We are flying somewhat blind at a time when good reliable data is essential if we are to chart a path through current uncertainties. Or maybe the inconvenient truth about rising unemployment will be muted as a result, and this was not entirely without intent.

More Units Help Drive Building Approvals Higher – ABS

The ABS released their building approvals data to August 2014. The number of dwellings approved rose 1.2 per cent in August 2014, in trend terms, and has risen for three months.

Dwelling approvals increased in August in the Australian Capital Territory (13.0 per cent), Northern Territory (8.8 per cent), Queensland (2.7 per cent), South Australia (0.9 per cent), Victoria (0.6 per cent), Western Australia (0.5 per cent) and New South Wales (0.4 per cent) but decreased in Tasmania (4.3 per cent) in trend terms.

In trend terms, approvals for private sector houses were flat in August. Private sector house approvals rose in New South Wales (1.8 per cent) and Queensland (0.8 per cent), but fell in South Australia (2.9 per cent), Western Australia (0.8 per cent) and Victoria (0.5 per cent).

PrivateSectorDwellingsAugust2014The trend estimate for private sector dwellings excluding houses rose 3.1% in August and has risen for three months. The seasonally adjusted estimate for private sector dwellings excluding houses rose 9.6% in August and has risen for two months. Units account for more than 50% of approvals in NSW, whereas in WA, it is about 23%.

PCUnitsAugust2014The value of total building approved rose 0.8 per cent in August, in trend terms, and has risen for two months. The value of residential building rose 1.4 per cent while non-residential building fell 0.5 per cent in trend terms. The seasonally adjusted estimate of the value of total building approved rose 0.5% in August following a fall of 10.9% in the previous month. The value of residential building rose 3.0% and has risen for two months. The value of non-residential building fell 4.5% and has fallen for two months.

ValueBuildingWorkAugust2014

Household Income Trends Show Strongest Growth At The Top

The ABS today released their Distribution of Household Income, Consumption and Wealth data for the years from 2003 to 2012.   According to the ABS, the average gross disposable income of Australian households grew 58 per cent in the period 2003-04 to 2011-12. However, the highest income quintile grew at a rate above average, at 62 per cent. All other income quintiles grew above 50 per cent , but below the average rate of 58 per cent. We see that older Australian’s income has been growing faster than younger ones.

GrossIncomesBy-AgeBandsThe relative share of gross income is gravitating towards older households. This is a function of the growing number of older households, thanks to the demographic shifts, and the fact they hold the lions share of investments yielding income.

RelativeShareGrossIncomesBy-AgeBandsWe can also look across the income quintiles (20% bands). We see stronger income growth in the higher income groups. This is stated in perecentage terms, but in doller terms the relative amounts are significant.

GrossIncomesPCQuintilesWe can see that growth in incomes for the richest quintile is stronger than the lower ones.

GrossIncomesQuintilesThe ABS says growth in wages and salaries was by far the largest contributor to this increase, except for the lowest income quintile, where social assistance benefits were the largest contributor to their income growth.

This is an important data-set and is the first time data for household groups has been released under the framework of the national accounts. We can look at which household groups are driving the growth in income, consumption, savings and wealth in the national accounts.

For example, households with two adults and dependent children were responsible for about one-third of the growth in household gross disposable income.

Households where the reference person was aged 35 to 44 years had an increase in income tax of $9,000 – with their payments going from $17, 000 in 2003-04 to $26,000 in 2011-12 – which was above the average increase of $4,500.

Of course this data stops in 2012, so we cannot yet see the impact of falling incomes in real terms, which we have discussed previously.

Australian Population Now 23.4m And Ageing

The ABS just released their preliminary demographic statistics to end March 2014. Australia’s total population increased by 388,400 people to reach 23.4 million by the end of March 2014, with a growth rate of 1.7 per cent, a continuation of the average annual growth rate for the past three years. Natural increase contributed 156,900 people to Australia’s population in the year to 31 March 2014, consisting of 306,500 births and 149,600 deaths. Net overseas migration contributed 231,500 to the population over the same period, accounting for 60 per cent of Australia’s total growth.

AustralianPopulationMar2014All states and territories recorded positive population growth in the year ended 31 March 2014. Western Australia continued to record the fastest growth rate of all states and territories at 2.5%. Tasmania recorded the slowest growth rate at 0.3%. New South Wales and Victoria continued to experience high population growth going against the trend of slowing annual growth around Australia –  the population of New South Wales and Victoria grew by 114,500 and 108,800 respectively. Net overseas migration (NOM) was the main contributor to both New South Wales and Victoria’s population growth, accounting for 67 and 57 per cent of the states’ growth respectively. The NOM contribution to Victoria’s growth is below the Australian rate of 60 per cent, which highlights the recent increase in net interstate migration to the state. We’re also seeing fewer people moving to Queensland and Western Australia. Queensland recorded one of its lowest annual gains on record, slowing by 65 per cent in five years. Meanwhile, New South Wales recorded its lowest annual interstate loss in nearly 30 years and Victoria recorded its highest annual gain on record.
AustralianStatePopulationMar2014There is a significant skew towards older Australians, as can be seen by the relative movement from 1971, by age bands. In fact in absolute numbers, those under 20 years grew the slowest whilst those aged 40-69 grew the fastest. This has a profound impact on the community, with those planning to retire well ahead of new workers ready to join the workforce – yet youth unemployment is very high, as we discussed recently.

AustralianAgePopulationMar2014We can also look at the splits in percentage terms, which shows again these trends. In 1971, the fiftieth point was 27 years, today it is 38 years, and rising.

AustralianAgePCPopulationMar2014

 

Strong Investment Lending In Latest Finance Data

In the final element of the monthly series, the ABS today released their lending data for July. The total value of owner occupied housing commitments excluding alterations and additions rose 0.3% in trend terms and the seasonally adjusted series was flat. The trend series for the value of total personal finance commitments rose 0.4%. Revolving credit commitments rose 0.8% and fixed lending commitments rose 0.1%. The seasonally adjusted series for the value of total personal finance commitments fell 1.3%.

LendingFinanceJuly2014Revolving credit commitments fell 4.7%, while fixed lending commitments rose 1.5%. The trend series for the value of total commercial finance commitments rose 2.7%. Revolving credit commitments rose 5.1% and fixed lending commitments rose 1.6%. The seasonally adjusted series for the value of total commercial finance commitments rose 3.7% in July 2014, following a rise of 11.8% in June 2014. Fixed lending commitments rose 20.7%, following a rise of 0.8% in the previous month. Revolving credit commitments fell 25.9%, after a rise of 37.7% in the previous month. Looking at the data in more detail, we see the concentration of lending by the banks (and mainly the big four).

PseronalFinanceByLenderWithin the commercial category, lending for housing investment by individuals was a significant element. Here is the absolute dollar amount by states, with a trend line, showing the relative strength in lending for investment purposes in NSW in particular, then VIC. InvestmentLendingByStateJuly2014The investment lending boom is not uniformly spread across the country. Another way to look at the data is on a per capita basis across each state. This chart shows the average amount per capita between January 2011 and July 2014. The movement is NSW in particular since May 2013 highlights both the volume and size of the average loans for investment purposes in NSW, compared with the other states. It is also worth noting the differences between NSW and some of the other states, especially TAS and SA, and we see WA, NT and VIC roughly marching together, behind the rabid pace set by NSW.

InvestmentLendingPCByStateJuly2014

 

 

Building Approvals To July 2014

The ABS published their Building Approvals Data to July 2014 today. Statistics of building work approved are compiled from, permits issued by local government authorities and other principal certifying authorities; contracts let or day labour work authorised by commonwealth, state, semi-government and local government authorities; and major building approvals in areas not subject to normal administrative approval e.g. building on remote mine sites. The scope of the collection comprises construction of new buildings; alterations and additions to existing buildings; approved non-structural renovation and refurbishment work; and approved installation of integral building fixtures.

The trend estimate for total dwellings approved fell 0.5% in July and has fallen for seven months. The seasonally adjusted estimate for total dwellings approved rose 2.5% in July following a fall of 3.8% in the previous month. The trend estimate for private sector houses approved fell 0.2% in July after being flat in the previous month. The seasonally adjusted estimate for private sector houses rose 1.4% in July following a fall of 1.0% in the previous month. NSW appears to be underrepresented given the relative population by states.

ResidentialBuildingNumberJuly2014The trend estimate of the value of total building approved fell 0.2% in July and has fallen for seven months. The value of residential building rose 0.2% and has risen for two months. The value of non-residential building fell 0.8% and has fallen for eight months. The seasonally adjusted estimate of the value of total building approved fell 10.4% in July after rising for two months. The value of residential building rose 0.8% following a fall of 3.2% in the previous month. The value of non-residential building fell 26.5% after rising for two months.

ResidentialBuildingJuly2014The Chain Measures series, which reflect changes in the volume of building work approved after the direct effects of price changes have been eliminated. The ABS tell us that the chain volume measures are annually reweighted chain Laspeyres indexes referenced to current price values in a chosen reference year. We see a swing up in value for both houses and other residential buildings since July 2012, impacted by lower interest rates and higher demand. However, the absolute value, was relatively similar in March 2004, to July 2014 after correcting for inflation.

ResidentialBuildingChainJuly2014Depending of whether you go with the original data or seasonally adjusted data, you can argue that residential building approvals are either up, or down.

 

Managed Funds Industry Now At A Record $2.4 Trillion

The ABS released their data for the managed funds industry to June 2014 today. At 30 June 2014, the managed funds industry had $2,405.3b funds under management, an increase of $46.1b (2%) on the March quarter 2014 figure of $2,359.2b. The main valuation effects that occurred during the June quarter 2014 were as follows: the S&P/ASX 200 was flat; the price of foreign shares, as represented by the MSCI World Index excluding Australia, increased 4.2%; and the A$ appreciated 2.2% against the US$.
ManagedFundsIndustryJune2014At 30 June 2014, the consolidated assets of managed funds institutions were $1,895.3b, an increase of $31.3b (2%) on the March quarter 2014 figure of $1,864.0b. The asset types that increased were units in trusts, $12.5b (6%); shares, $9.2b (2%); overseas assets, $9.0b (3%); loans and placements, $4.8b (11%); bonds, etc., $3.3b (3%); short term securities, $2.1b (3%); and derivatives, $0.2b (16%). These were partially offset by decreases in other financial assets, $5.0b (12%); deposits, $4.5b (2%); other non-financial assets, $0.3b (2%); and land, buildings and equipment, $0.1b (0%).

A Tale Of Two Cities – Demand and Supply In Action

Last week we reported on the ABS house stock data, which valued property at more than 5.2 trillion in Australia. We have been looking in more detail at this data, and cross relating it to information from our own household surveys. Today we compare the markets in NSW and WA, because there are some interesting observations to note. First, NSW and WA have the highest mean dwelling prices in Australia. NSW stands at more than $650,000 and WA $595,000, ahead of VIC and ACT. TAS has the lowest mean at just over $300,000.

DwellingPricesByStateJune2014In addition, when we look at the decomposition of the $5.2 trillon by state, NSW has the largest share, WA has a smaller, but significant share, behind VIC and QLD.

TotalValueDwellingsByStateJune2014But, there are some interesting differences between NSW and WA. Population growth, from all sources (migration, births, and interstate movements), shows that WA is growing faster than NSW. So, from the demand perspective, we would expect prices in WA to be responding to that demand.StatePopulationGrowthNSWandWAJune2104In fact, dwelling prices in WA have been growing at a significantly lower speed than in NSW. In fact, most recent data suggests prices in WA are going slightly backwards.

DwellingPricesNSWandWAJune2014So, whats making this happen? We need to look at the supply side of the equation. WA have been building more properties, significantly more, than NSW. So demand and supply in WA are more in balance, even taking the faster population growth into account.

ChangeInDwellingsNSWandWAJune2014We also checked out the status of property purchase by SMSF’s and the like, and there are similar trends in the two states, so that element can be discounted from the analysis. We have previously highlighted the shrinking average plot size for new developments, and noted that WA has been allowing plot sub-division and new builds on sub-250 sqm plots. So it is interesting to note NSW’s recent announcement to release land in the west for smaller development plots. Supply and demand are clearly in action, and NSW house prices won’t adjust from their stratospheric levels until substantial supply side issues are addressed.  The way to address Australia’s housing issues is to release more land, and build more houses.