Aussie job ads lift by the most in 7 months
Petrol prices hit 5-month low
Petrol Prices; Building approvals; Job advertisements; Inflation gauge
Petrol prices: According to the Australian Institute of Petroleum, the national average price of unleaded petrol fell by 8.3 cents to 5-month lows of 140.3 cents a litre last week due to the retail discounting cycle.
Building approvals: Council approvals to build new homes fell by 0.2 per cent in December to 14,752 units. But approvals are up by 2.7 per cent from a year ago – the strongest annual growth rate in 19 months. In trend terms, overall approvals rose by 2.1 per cent – the biggest increase in over 2 years.
Job advertisements: ANZ job advertisements rose by 3.8 per cent in January – the biggest lift in 7 months. But ads were still down by 11.8 per cent over the year to 149,544 in seasonally adjusted terms.
Inflation gauge: The Melbourne Institute’s headline inflation gauge rose by 0.3 per cent in January to be up 1.8 per cent over the year. The Reserve Bank’s preferred underlying inflation measure – the trimmed mean gauge – rose by 0.4 per cent to be up 1.6 per cent on the year.
The petrol figures have implications for retailers, especially petrol marketing groups. The approvals data has implications for banks, retailers, developers, building and building material companies. 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 inflation gauge estimates month-to-month price movements for a wide-ranging basket of goods and services.
What does it all mean?
• Australia’s job market remained resilient at the turn of the year, despite the bushfire crisis impacting large swathes of the country. In January, ANZ’s job ads measure rose by almost 4 per cent – the biggest gain since June 2019. The pick-up follows the creation of 67,000 new jobs in November and December, pushing the jobless rate back down to 5.1 per cent – near 8-year lows.
• Aussie unleaded petrol prices fell to 5-month lows last week. Pump prices are averaging a smidgen over $1.40 a litre across the nation. In the more competitive retail fuel markets on the east coast, prices at the bowser are currently averaging around $1.30 a litre – at the lowest levels since September 2019.
• So why are petrol prices so low? The retail petrol price discounting cycle is keeping a lid on prices in Brisbane, Sydney and Melbourne. But motorists should fill up now. Pump prices are close to the bottom of the cycle – now 20 days old – and will begin lifting by the weekend.
• Concerns about China’s oil demand due to the coronavirus impact on economic activity are another factor pushing down Aussie petrol prices. In fact, the US Nymex crude oil price plummeted by 16 per cent in January – its worst start to a year since 1991. And the Singapore benchmark gasoline price – the largest component of fuel prices paid by motorists – fell to 8-month lows of US$66.25 a barrel last week. In Australian dollar terms, the Singapore gasoline price fell by $2.90 or 2.9 per cent to $98.53 a barrel or 61.97 cents a litre – also an 8-month low.
What do the figures show?
• According to the Australian Institute of Petroleum, the national average price of unleaded petrol fell by 8.3 cents to 140.3 cents a litre last week. The metropolitan price fell by 12.0 cents to 137.0 cents a litre and the regional price fell by 1.1 cents to 146.8 cents a litre.
• Average unleaded petrol prices across states and territories over the past week were: Sydney (down 14.0 cents to 133.1 c/l), Melbourne (down by 12.9 cents to 138.5 c/l), Brisbane (down by 12.6 cents to 135.1 c/l), Adelaide (down by 22.2 cents to 138.2 c/l), Perth (down by 1.9 cents to 140.0 c/l), Darwin (down by 1.1 cents to 138.7 c/l), Canberra (down by 0.2 cents to 146.4 c/l) and Hobart (down by 0.2 cents to 155.5 c/l).
• The smoothed gross retail margin (2-month rolling average) for unleaded petrol rose from 15.06 cents a litre to a 7½-month high of 15.29 cents a litre (24-month average: 13.2 cents a litre).
• The national average diesel petrol price fell by 0.4 cents to 149.8 cents a litre over the past week. The metropolitan price fell by 0.4 cents to 148.4 cents a litre and the regional price was down by 0.4 cents to 151.0 cents a litre.
• Today, the national average wholesale (terminal gate) unleaded petrol price stands at 127.5 cents a litre, down 2.9 cents over the week. The terminal gate diesel price stands at 131.5 cents a litre, down by 3.5 cents over the past week.
• MotorMouth records the following average retail prices for unleaded fuel in capital cities today: Sydney 129.5c; Melbourne 132.0c; Brisbane 130.4c; Adelaide 146.7c; Perth 129.6c; Canberra 146.3c; Darwin 138.4c; Hobart 155.3c.
• The key Singapore gasoline price fell by US$3.20 or 4.6 per cent last week to 8-month lows of US$66.25 a barrel. In Australian dollar terms, the Singapore gasoline price fell by $2.90 or 2.9 per cent to $98.53 a barrel or 61.97 cents a litre – also an 8-month low.
Building Approvals – December
• Council approvals to build new homes fell by 0.2 per cent in December to 14,752 units. But approvals are up by 2.7 per cent from a year ago – the strongest annual growth rate in 19 months.
• House approvals fell by 0.1 per cent and apartment approvals were down by 0.3 per cent.
• In trend terms, overall approvals rose by 2.1 per cent in December – the biggest increase in over 2 years.
• Over the past year 172,510 new homes were approved, below the decade average of 196,675 units.
• Dwelling approvals across states/territories: NSW (down 30.5 per cent); Victoria (up 34.0 per cent); Queensland (down 5.7 per cent); South Australia (down 20.1 per cent); Western Australia (up 5.4 per cent); Tasmania (down 8.9 per cent). In trend terms: Northern Territory (up 4.7 per cent); ACT (up 1.0 per cent).
• The value of all commercial and residential building approvals rose by 13.4 per cent in December. Residential approvals rose by 2.6 per cent with new building up by 3.2 per cent, but alterations & additions were down by 1.8 per cent. And commercial building rose by 30.9 per cent.
• Over the year to December, building approvals totalled $115.4 billion, 15.5 per cent above the decade average.
Job advertisements – January
• ANZ job advertisements rose by 3.8 per cent in January – the biggest lift in 7 months. But ads were still down by 11.8 per cent over the year to 149,544 in seasonally adjusted terms.
Inflation gauge – January
• The Melbourne Institute monthly headline inflation gauge rose by 0.3 per cent in January. The annual growth rate lifted from 1.4 per cent in December to 1.8 per cent in January. The smoothed 12-month annual average of the gauge is at 1.67 per cent in October – just above the slowest growth rate in 2½ years.
• The trimmed mean gauge lifted by 0.4 per cent in January to be up 1.6 per cent from a year ago – below the Reserve Bank’s 2-3 per cent underlying inflation target.
What is the importance of the economic data?
• Weekly figures on petrol prices 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.
• The Bureau of Statistics’ monthly Building Approvals release contains figures on local council approvals to build residential structures such as homes and units as well as commercial premises such as offices and shops. Approval is one of the first stages of the construction ‘pipeline’ and is thus a key leading indicator of future activity. An increase in approvals would point to stronger future activity for construction-related companies.
• 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 have developed a monthly inflation indicator to give markets and policy makers a monthly 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. This report is produced monthly and is released with a lag of one month.
What are the implications for interest rates and investors?
• Aussie residential building activity is showing more evidence of stabilising. In fact, building approvals in trend terms rose by 2.1 per cent in December – the biggest monthly gain since September 2017. Apartment projects are driving volatile outcomes in NSW and Victoria. But the strong rebound in Sydney and Melbourne home prices, record-low borrowing costs and still-solid population growth could underpin demand and the eventual bottoming-out in the construction sector by late 2020.
• Reserve Bank policymakers will be heartened that multiple interest rate cuts supported jobs growth in late 2019. While the impact of bushfires on the labour market is still unknown, ANZ’s leading indicator of jobs growth made a promising start to 2020.
• Commonwealth Bank Group economists continue to expect another interest rate cut from the Reserve Bank in the coming months to support the economy.
Published by Ryan Felsman, Senior Economist, CommSec