Job vacancies; International aviation; China inflation
Job vacancies: Job vacancies rose by 2.7 per cent to a record 210,300 in the three months to November.
Job vacancies are up 16.1 per cent on a year ago – the strongest annual growth rate in 7 years.
Overseas tourists flock to Australia: International passenger traffic to Australian airports rose by 4.5 per cent to 3.37 million in October, up from 3.226 million a year ago. The number of international flights to Australia rose by 3.2 per cent to 16,772 in October, up from 16,259 a year ago. Qantas retained its position as the leading carrier of passengers with its share rising by 1.2 per cent to 16.8 per cent over the year.
China inflation: Consumer prices rose to 1.8 per cent in the year to December (forecast 1.9 per cent) after increasing by 1.7 per cent in November. Producer price annual inflation fell to 4.9 per cent (forecast 4.8 percent) in December after rising by 5.8 per cent in November.
What does it all mean?
The number of Aussie job vacancies increased by the strongest annual growth rate in seven years, reaching fresh record highs in November.
Employment growth was incredibly strong in 2017, rising by 3.2 per cent over the year to November. Over the period, 383,300 jobs were created, the biggest annual gain for over 12 years. The unemployment rate stands at 5.4 per cent, a 4½-year low and down from 5.8 per cent at the end of 2016.
Forward indicators of hiring intentions continue to suggest the labour market will tighten further withthe unemployment rate edging lower towards 5 per cent in 2018. While the ANZ job advertisements fell moderately in December off 6-year highs, advertisements are still up a healthy 10.8 per cent on a year ago. The NAB Business Survey is consistent with employment growth of around 20,000 per month, above the break-even level of 14,400 jobs to keep the unemployment rate steady. And as the job market tightens and skilled vacancies emerge, wages are likely to eventually rise, together with prices and interest rates.
Job vacancies growth is broad-based across states, territories and industries. NSW and Victoria continue to lead the way, supported by record low interest rates and population growth, attracted to Australia’s two most populous cities, Sydney and Melbourne. Pleasingly, vacancies are rising in the mining states of Western Australia and Queensland. The Sunshine State has recorded the strongest jobs growth in Australia over the past 12 months, with 113,000 positions created. Job vacancies are at the highest level in 5 years. Western Australian labour market conditions are improving too, with vacancies at 3-year highs.
The services sector continues to lead job creation across the nation. Three quarters of the jobs added over the past year were full-time positions in health, retail, construction and personal services. These outcomes are again reflected in the job vacancies data, though manufacturing showed surprise strength given 84,000 jobs were lost by the sector over the past year.
More people are flying and planes are filling up, underpinning airline revenues and profits, boosting Australia’s tourism industry. The number of international tourists travelling to Australia from China, in particular, has risen significantly. Healthy increases in airline passengers from Malaysia, Thailand and Japan also reached Australian holiday destinations over the year to October.
What do the figures show?
Job vacancies rose by 2.7 per cent to a record 210,300 in the three months to November. Job vacancies are up 16.1 per cent on a year ago – the strongest annual growth rate since 2010.
In original terms, annual changes in vacancies across states and territories were: NSW (up 18.1 per cent); Victoria (up 26.7 per cent); Queensland (up 4.2 per cent); South Australia (down 5.2 per cent); Western Australia (up 11.9 per cent); Tasmania (up 25.0 per cent); Northern Territory (up 22.2 per cent) and ACT (up 26.3 per cent).
Vacancies rose 30,200 in original terms over the year. In terms of industries, 12 of the 18 industries had increased vacancies over the year. Vacancies rose the most in Administrative & Support services (up 13,000), Manufacturing (up 4,000), Health Care & Social Assistance (up 3,500) and Retail Trade (up 3,200). Vacancies fell most in Finance & Insurance Services (down 2,800), Other Services (down 1,100) and Education & Training (down 400).
By sector, private sector job vacancies rose by 3.8 per cent over the 3 months to November and by 17.2over the year. Vacancies in the public sector fell by 7.5 per cent in the 3 months to November, but increased by 4.9 per cent from a year ago.
International airline traffic:
According to the Bureau of Infrastructure, Transport and Regional Economics (BITRE) in October international scheduled passenger traffic was 3.37 million, an increase of 4.5 per cent on October 2016.
The total number of seats made available on international scheduled flights to/from Australia increased by 3.7 per cent to 4.368 million in October from 4.211 million in October 2016. The overall seat utilisation percentage of passengers travelling through Australian airports increased to 79.1 per cent in October 2017 from 79.1 per cent in October 2016.
While New Zealand inbound airline passengers lead the way at 18 per cent of all international visitors as at October, China recorded the largest increase in passenger numbers to Australia, up by 27.5 per cent from October 2016. Healthy increases were also recorded for Malaysia (up 8.5 per cent), Thailand (up 8.5 per cent) and Japan (up 8.3 per cent).
In terms of airline passenger carriage share over the year to October, Qantas Airways retained its position in first place, increasing its share by 1.2 per cent to 16.8 per cent. Singapore Airlines (up 0.3 per cent) and China Southern Airlines (up 0.4 per cent) were the other airlines to increase. Jetstar (down 0.4 per cent), Emirates (down 0.4 per cent), Air New Zealand (down 0.1 per cent), Virgin Australia (down 0.4 per cent), Cathay Pacific Airways (down (0.2 per cent), Air Asia X (down 0.3 per cent) all declined. Etihad Airways was flat.
Low Cost Carriers AirAsia X, Cebu Pacific Air, Indonesia AirAsia, Jetstar, Jetstar Asia and Scoot/Tigerair accounted for 16.4 per cent of total international passenger traffic to/from Australia in October 2017, falling by 1.6 per cent from October 2016.
Consumer prices rose to 1.8 per cent in the year to December (forecast 1.9 per cent) after increasing by 1.7 per cent in November.
Annual growth in non-food prices rose by 2.4 per cent. But food prices fell 0.4 per cent on the year, driven by pork and vegetable price declines.
Producer price annual inflation fell to 4.9 per cent (forecast 4.8 per cent) in the year to December after rising by 5.8 per cent in November.
What is the importance of the economic data?
The Australian Bureau of Statistics releases Job Vacancies data each quarter. The data is useful in gauging the strength of the job market.
The Bureau of Infrastructure, Transport and Regional Economics (BITRE) release data on domestic and international aviation each month. The data is useful in tracking consumer spending and airline performance.
China’s National Bureau of Statistics releases its monthly economic statistics around mid-month. Quarterly GDP data is released around the 19th of January, April, July and October. China’s Customs Office releases trade data, and the People’s Bank of China releases financial statistics, around the 10th of each month. China is Australia’s largest trading partner and changes in the Chinese economic have major implications for the Aussie economy.
What are the implications for interest rates and investors?
The strong jobs market performance is likely to continue in 2018. Job vacancies are at record highs. Momentum is particularly strong in NSW and Victoria, but labour market conditions are also improving in Queensland and Western Australia. The services sector continues to be the growth engine of the Australian economy with most jobs created in the sector over the past 12 months.
The transmission from strong employment growth to pay rises for employees remains elusive so far due to globalisation and digital disruption. We expect wages growth and inflation to gradually pick-up in 2018.
China’s economy is in solid shape, causing inflation to rise. The strength of China’s economy is positive for Aussie exporters. However, easing factory prices and contained consumer prices should reduce pressure on China’s central bank to tighten policy rates in the near-term.
CommSec expects no change to interest rates until well into 2018.
Originally published by Ryan Felsman, Senior Economist, CommSec