Sydney & Brisbane petrol prices to spike;

Sydney & Brisbane petrol prices to spike
Job ads jump; Used car prices lift; Deflation

Petrol Prices; Job advertisements; Inflation; Used car prices

Fuel prices: The national average price of unleaded petrol fell by 3.8 cents to 119.8 cents a litre (c/l) last week according to the Australian Institute of Petroleum. Metropolitan prices fell by 5.5 cents to 119.9c/l with regional prices down by 0.3 cents to 119.5c/l.

East Coast petrol prices: Daily unleaded retail petrol prices in Brisbane, Sydney and Melbourne are averaging $1.06-$1.34 a litre today (source: MotorMouth) – in the cheaper phase of the cycle. Motorists in Brisbane and Sydney should fill up as soon as possible ahead of widespread price hikes expected before the weekend. But Melbourne motorists should top up rather than fill up with prices still decreasing.

Job advertisements: ANZ job advertisements rose by 9.4 per cent in October to 129,544 available positions. Ads have lifted for six successive months after falling by a record 53.1 per cent in April. Available positions are down by 16.2 per cent from a year ago and are 13.5 per cent below February levels.

Inflation: The Melbourne Institute inflation gauge fell by 0.1 per cent in October to an annual growth rate of 1.1 per cent. The trimmed mean measure declined 0.1 per cent to be down 0.1 per cent over the year.

Used car prices: According to Datium Insights (based on Pickles auction data), used car prices rose by 3.8 per cent last week with General Government (+7.1 per cent) leading the increases.

Movements in the petrol price can affect consumer spending, and in turn, prospects for retailers. Used car price data is useful in gauging activity levels in the motor vehicle market. The job advertisements data is a leading indicator of the job market and therefore important for consumer-focussed stocks and companies such as SEEK. The approvals and engineering data have implications for banks, retailers, developers, building and building material companies.

What does it all mean?

• Brisbane and Sydney motorists should fill up their tanks as soon as possible to beat fuel price hikes. Average retail unleaded pump prices have fallen by around 30 cents a litre over the past three weeks and today sit at 111.90 cents a litre and 106.70 cents a litre, respectively, according to real-time fuel app MotorMouth. In Sydney’s West and South-West, prices are below $1 a litre, but prices have already hiked to $1.48 a litre in Mosman, Clovelly and Randwick. And the discounting cycle is expected to end on the weekend in Brisbane.

• Aussie job ads have climbed for six successive months. ANZ economists said, “Job ads have now regained more than three-quarters of the plunge they took in March and April.” On average, there are currently 129,544 positions available across Australia in October – well above the record low 63,565 roles advertised at the height of the COVID-19 lockdown in April.

• Last week, SEEK reported that job ads in the fortnight ended October 25 are at 90 per cent of pre-COVID levels. Encouragingly, ‘virus free’ states and territories, including Queensland, South Australia, Western Australia, Tasmania and Northern Territory all showed more job ads than pre-COVID levels. But Victoria’s emergence from its second lockdown remains crucial to the labour market recovery.

What do the figures show?

Weekly petrol prices

• The national average price of unleaded petrol fell by 3.8 cents to 119.8 cents a litre (c/l) last week according to the Australian Institute of Petroleum. Metropolitan prices fell by 5.5 cents to 119.9c/l with regional prices down by 0.3 cents to 119.5c/l.

• Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 9.9 cents to 108.7 c/l), Melbourne (up by 5.4 cents to 139.1 c/l), Brisbane (down by 11.4 cents to 116.1 c/l), Adelaide (down by 24.9 cents to 103.9 c/l), Perth (down by 0.2 cents to 117.1 c/l), Darwin (down by 0.5 cents to 117.1 c/l), Canberra (steady at 121.0 c/l) and Hobart (down by 0.1 cent to 123.2 c/l).

• The smoothed gross retail margin (2-month rolling average) for unleaded petrol fell from 17.84 cents to 16.88 cents (24-month average: 15.0 cents a litre).

• The national average diesel petrol price fell by 0.2 cent to 118.6 cents a litre over the past week. The metropolitan price fell by 0.2 cents to 117.2 cents a litre and the regional price was down 0.2 cents to 119.7 cents a litre.

• Last week, the national average unleaded Terminal Gate Price (TGP) was down by 0.5 cents to 102.6 cents a litre. The terminal gate diesel price fell by 0.8 cents to 100.7 cents a litre.

• Today, the average unleaded TGP stands at 102.3 cents a litre, down by 0.8 cents over the week. The terminal gate diesel price stands at 100.3 cents a litre, down 1.2 cents a litre over the week.

• MotorMouth records the following average retail prices for unleaded fuel in capital cities today: Sydney 106.7c/l; Melbourne 133.6c/l; Brisbane 111.9c/l; Adelaide 99.7c/l; Perth 109.6c/l; Hobart 123.1c/l; Darwin 116.8c/l; and Canberra 121c/l.

• Last week the key Singapore gasoline price fell by US$3.70 or 8.1 per cent – the most in 18 weeks – to a 22-week low of US$42.00 a barrel. In Australian dollar terms, the Singapore gasoline price lost US$4.62 or 7.2 per cent – the most in 18 weeks – to a 22-week low of $59.63 a barrel or 37.50 cents a litre.

Used vehicle market – Week ended November 2

• Data analytics firm, Datium Insights, provides a weekly report on the used vehicle market. In the week to November 2, used motor vehicle prices rose by 3.8 per cent after lifting 4.2 per cent in the previous week.

• In the latest week, supply of used vehicles rose 3.8 per cent, supported with a strong increase in ex-lease cars (+25.4 per cent). But Datium said, “Stock still remains considerably low.”

• Prices of ex-Government vehicles climbed 7.1 per cent with passenger and corporation vehicle prices both up 6.5 per cent. But Council vehicle prices fell 2 per cent.

• By vehicle, Datium reported, “Prices for top 15 traded vehicles were largely positive with the Holden Commodore (+9.8 per cent) and Toyota Hiace (+7.8 per cent) seeing the largest increases.”

Job advertisements – October

• ANZ job advertisements rose by 9.4 per cent in October to 129,544 available positions. Ads have lifted for six successive months after falling by a record 53.1 per cent in April. Available positions are down by 16.2 per cent from a year ago and are 13.5 per cent below February levels.

• ANZ said, “We think job ads will need to exceed pre-pandemic levels for some time to ensure the ongoing recovery in employment and reduce labour market underutilisation.”

Inflation – October

• The Melbourne Institute’s headline inflation gauge fell by 0.1 per cent in October to be up 1.1 per cent over the year.

• The Reserve Bank’s preferred underlying inflation measure – the trimmed mean gauge – declined 0.1 per cent to be down 0.1 per cent on the year.

What is the importance of the economic data?

• Weekly petrol prices data are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.

• Data analytics firm, Datium Insights, provides a weekly report on the used vehicle market. The data assists in gauging the strength of a key component of consumer spending and provides insights on the Autos and components sector of the sharemarket.

• The monthly Job Advertisements release is a leading employment indicator. Employers only seek additional staff if business activity is strong, and more importantly, if they expect that conditions will remain favourable in coming months. It takes around 5-6 months for the new staff to be added to the payrolls. But a fall in job advertisements would have a more immediate impact on monthly employment estimates.

• Melbourne Institute developed a monthly inflation indicator to give markets and policy makers a more regular update on inflation trends. Based on the ABS methodology for calculating the quarterly consumer price index, the Melbourne Institute Monthly Inflation Gauge estimates month-to-month price movements for a wide-ranging basket of goods and services across the main capital cities of Australia.

What are the implications for investors?

• Commonwealth Bank (CBA) Group economists expect the Reserve Bank Board to ease monetary policy tomorrow. On Melbourne Cup Day, we expect a trifecta of cuts: a cut in the cash rate, cut to the yield target for 3‑year Commonwealth Government bonds and a cut to the interest rate charged on the Term Funding Facility – all to 0.1 per cent. Policymakers may also announce a commitment to purchase a fixed $A100 billion quantity of Commonwealth and state government bonds focusing on the 5-10-year part of the yield curve – to anchor borrowing costs at low levels for households and businesses.

• Certainly the subdued inflation outlook justifies further monetary policy easing. Headline and trimmed mean inflation measures of consumer prices both fell by 0.1 per cent in October. In fact, trimmed mean prices – the Reserve Bank’s preferred measure – are also down 0.1 per cent on a year ago. And with crude oil prices plunging to 5-month lows today – due to demand fears from renewed lockdowns in Europe and the US – petrol prices look set to revisit $1 a litre or below in a few weeks’ time. That said, consumer prices are climbing in pockets of the economy – try purchasing a ‘cheap’ used car at the moment!

Published by Ryan Felsman, Senior Economist, CommSec