Record job vacancies; Wealthier AussiesFinancial Accounts; Job Vacancies
Wealthier Aussies: Total household wealth (net worth) rose by 1.0 per cent to $10,357.5 billion at the end of June 2018. In per capita terms, wealth rose from $411,821 to $414,463 in the June quarter.
Foreign share holdings: Foreigners held a record $604.9 billion of Aussie shares in the June quarter, up from $563.6 billion in the March quarter.
Job vacancies: Job vacancies rose by 0.6 per cent to a record 238,200 in the three months to August. Job vacancies are up by 16.5 per cent on a year ago – easing from the strongest annual growth rate 7½ years.
What does it all mean?
The Finance & Wealth publication from the Bureau of Statistics contains the most complete figures on household finances. And despite the fall in national home prices over the quarter, losses were more than offset by gains in financial assets, such as Aussie shares. Over the June quarter, the ASX200 index rose by 7.6 per cent and the All Ordinaries increased by 7.2 per cent – the best quarterly outcome since 2015.
On average, each Australian has net assets (assets less liabilities) of over $414,000, a total that has lifted by over $7,000 in the past year. And over the past five years per capita wealth has risen by almost $113,000 or 37 per cent. It is clear that household balance sheets remain solid.
Looking ahead, home prices are likely to ease further from record levels – especially in Sydney and Melbourne. It is difficult to predict whether global equity markets will continue to lift. US sharemarkets are straddling record highs and Aussie shares have been near decade highs.
The global economic backdrop is supportive and corporates are in good health – if the most recent corporate reporting seasons are any guide – but geo-political risks present challenges to investors. Per capita wealth may consolidate around $400,000 after significant gains over the past five years, should home valuations continue to deteriorate.
The Aussie jobs market is in rude health. Measures of unemployment are at the lowest in 4-6 years. There is still some spare capacity in the labour market, but further job gains are expected with leading indicators such as job vacancies at record highs. Private sector employment growth is particularly healthy, given that business conditions are just below record highs.
What do the figures show?Financial Accounts:
Total household wealth (net worth) rose by 1.0 per cent to $10,357.5 billion at the end of June 2018. In per capita terms, wealth rose from $411,821 to $414,463 in the Junequarter – below the record high of $416,258 in December 2017. Wealth is still up $7,072 or 1.7 per cent over the year.
The ABS noted: “Household net worth increased by 1.0% during June quarter 2018, recovering from a 0.6% decline last quarter. Financial assets were the largest contributor tothe increase in household net worth, contributing 1.35 percentage points to growth. In contrast, land and dwellings, and liabilities detracted 0.08 and 0.29 percentage points from growth, respectively.”
Households held a record $1,107.1 billion in cash and deposits at the end of June. Cash and deposit holdings represented 22.06 per cent of financial assets, up from 21.50 per cent in the March quarter, but still just above the post global financial crisis (GFC) average of 21.17 per cent and the long-term average of 16.39 per cent.
Households held a record $971.9 billion in shares or 18.7 per cent of all financial assets, in-line with the average since the global financial crisis.
Pension fund (superannuation fund) assets rose by $83.9 billion to $2,250.9 billion in the June quarter. Cash and deposits stood at 10.8 per cent of financial assets, below the 13.2 per cent average since the global financial crisis, but above the long-term average of 9.4 per cent.
Foreigners held a record $604.9 billion of Aussie shares in the June quarter, up from $563.6 billion in the March quarter. Foreigners held 31.2 per cent of total listed shares (long-term average 32.9 per cent).
Job vacancies rose by 0.6 per cent to a record 238,200 in the three months to August. Job vacancies are up by 16.5 per cent on a year ago, easing from the strongest annual growth rate for 7½-years in May.
In original terms, quarterly changes in vacancies across states and territories were: NSW (up 6.6 per cent); Victoria (up 6.5 per cent); Queensland (up 7.7 per cent); South Australia (up 4.4 per cent); Western Australia (up 14.5 per cent); Tasmania (up 25.0 per cent); Northern Territory (down 5.1 per cent) and ACT (up 4.2 per cent).
In original terms, annual changes in vacancies across states and territories were: NSW (up 7.6 per cent); Victoria (up 28.8 per cent); Queensland (up 0.3 per cent); South Australia (up 30.8 per cent); Western Australia (up 43.0 per cent); Tasmania (up 20.0 per cent); Northern Territory (down 2.6 per cent) and ACT (up 19.4 per cent).
Vacancies rose by 16,600 or 7.3 per cent in original terms over the three months to August. In terms of industries, 14 of the 18 industries had increased vacancies. Vacancies rose the most in Accommodation and Food Services (up 3,300), Retail Trade (up 3,200) and Health Care & Social Assistance (up 3,100). Vacancies fell by the most in Public Administration & Safety (down 1,900), Manufacturing (down 900) and Information Media & Telecommunications (down 800).
Vacancies rose by 34,600 or 16.6 per cent in original terms over the year to August. In terms of industries, 13 out of 18 industries reported more vacancies. Vacancies rose the most in Administrative & Support Services (up 14,700), Professional, Scientific and Technical Services (up 5,500) and Wholesale Trade (up 3,100). But vacancies fell for Public Administration & Safety (down 600), Manufacturing (down 600) and Accommodation and Food Services (down 300).
By sector, private sector job vacancies rose by 0.7 per cent over the three months to August and by 17.9 over the year. Vacancies in the public sector were flat in the threemonths to August, but increased by 4.6 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?
Household consumption remains a key uncertainty for Reserve Bank policymakers. It was no surprise that consumption was solid in the June quarter, supporting broader economic growth.
Strength in the sharemarket more than offset falling home prices in some cities, resulting in a rebound in total household wealth after the first decline in two years in the March quarter.
But with wages tracking closely in-line with inflation and home prices now easing, there will be continued doubt about future spending by Australian families. In other words, it is another reason for the Reserve Bank to leave the official cash rate on hold for the foreseeable future.
The strength in the job market will eventually lead to higher wages and prices as spare capacity in the labour market erodes and skills shortages emerge in some sectors.
CommSec expects official rates to remain stable until late 2019.
Published by Ryan Felsman, Senior Economist, CommSec
Record job vacancies; Wealthier AussiesFinancial Accounts; Job Vacancies