Consumer confidence consolidates; Exit Australia

Payroll jobs & wages near pre-pandemic levels
Consumer confidence; Overseas arrivals & departures; Weekly Payrolls; CBA HSI

Consumer confidence: The weekly ANZ-Roy Morgan consumer confidence rating fell by 0.9 per cent to 110.9 (long-run average since 1990 is 112.6). But confidence is still up by 69.8 per cent since hitting record lows of 65.3 on March 29, 2020 (lowest since 1973).

Overseas arrivals & departures: Overseas visitor arrivals fell by 9.5 per cent in January to 7,990 trips. Arrivals are down by 99.0 per cent from a year ago. Resident returns – short trips fell by 20.6 per cent in January to 11,350 trips. Departures are down 99.2 per cent on a year ago. On balance, 2,040 people departed Australia in January with 20,790 people leaving Australia since March 2020.

Survey of payrolls & wages: The Bureau of Statistics (ABS) reported that national payroll jobs rose by 0.4 per cent and wages were steady over the fortnight to February 27, 2021. Payroll jobs were just 0.2 per cent below levels at the start of the pandemic (since Australia recorded its 100th confirmed case of Covid-19 on March 14, 2020). And wages were 1.0 per cent higher over the period.

CBA Household Spending Intentions: According to CBA economists, “The Commonwealth Bank Household Spending Intentions series for February 2021 showed mixed results across the seven spending categories, but overall continued to point to ongoing improvement in household spending in the Australian economy.”

The consumer confidence and household spending intentions figures have implications for retailers, and other consumer-focussed businesses. Tourism data is important for airlines, hotels, shops and transport operators. Migration data is important for housing markets, retailers and government planners. The payroll and wage data helps government with decisions on assistance measures for households and businesses.

What does it all mean?

• Consumer sentiment, as measured by Roy Morgan and ANZ, eased 0.9 per cent last week after successive weekly gains. Sentiment has edged higher by 0.5 per cent in the first half of March, broadly consolidating around 2021 index averages of 110.5 points. ANZ economists said the new Sydney Covid-19 case was “too late to be captured in the survey, while confidence in Queensland [where Brisbane had one new virus case] fell by a lot less than some of the other states.” Of course the imminent expiry of the JobKeeper wage subsidy could be causing some unease for recipients, despite the Federal Government’s $1.2 billion tourism support package.

• And the Commonwealth Bank’s (CBA) Household Spending Intentions (HSI) survey for February has signalled that Australia’s housing boom is set to continue, supported by supportive government policies and record low interest rates. CBA Group economists said, “Home buying intentions continued to march higher in February, with the smoothed series reaching its highest level since the start of the HSI data series in 2015. Both mortgage applications and Google searches were up in February in comparison to the month and year prior.”

• The impressive recovery in Australia’s labour market continues. Aussie payroll jobs are a smidgen below pre-pandemic levels at the end of February. In fact, data from the Bureau of Statistics and the Australian Taxation Office show payroll jobs were just 0.2 per cent below levels at the start of the pandemic (since Australia recorded its 100th confirmed case of Covid-19 on March 14, 2020). And wages are 1.0 per cent higher over the period. That said, there are pockets of weakness evident in the figures. Payroll jobs fell by 0.8 per cent for Aussie businesses with less than 20 employees over the fortnight to February 27, 2021 – perhaps signalling some shedding of jobs ahead of the expiry of JobKeeper.

What do you need to know?

Consumer sentiment – Week ended March 14

• The weekly ANZ-Roy Morgan consumer confidence rating fell by 0.9 per cent to 110.9 (long-run average since 1990 is 112.6). But confidence is still up by 69.8 per cent since hitting record lows of 65.3 on March 29, 2020 (lowest since 1973).

Tourism, migration & education – January

• In original terms, overseas visitor arrivals fell by 9.5 per cent in January to 7,990 trips. Arrivals are down by 99.0 per cent from a year ago. The three leading source countries in January were New Zealand (1,580 trips); the US (890); and UK (740).

• Resident returns – short trips fell by 20.6 per cent in January to 11,350 trips. Departures are down 99.2 per cent on a year ago. Main destinations were New Zealand (1,820 trips); India (960); and the UK (930).

• In January, the number of short-term visitors arriving for educational purposes stood at 360. A year ago 91,600 students arrived in Australia to study.

• There were 13,860 people defined as ‘permanent or long-term departures’ in January – the most in 10 months. But there were 11,820 people defined as ‘permanent or long-term arrivals’ – also the most since March 2020. On balance, 2,040 people departed Australia in the month – the biggest net outflow in three months – with 20,790 people leaving Australia since March 2020.

Weekly payroll and wages – Week ending February 27

• The Bureau of Statistics (ABS) reported that national payroll jobs rose by 0.4 per cent and total wages were steady over the fortnight to February 27, 2021.

• Payroll jobs were just 0.2 per cent below levels at the start of the pandemic (since Australia recorded its 100th confirmed case of Covid 19 on March 14, 2020). But wages are 1.0 per cent higher over the period.

• Payrolls across state and territories over the fortnight to February 27, 2021: NSW (+0.4 per cent); Victoria (+0.4 per cent); Queensland (+0.6 per cent); South Australia (+0.4 per cent); Western Australia (+0.6 per cent); Tasmania (flat); Northern Territory (+0.5 per cent) and the ACT (+0.2 per cent).

• Between the week ending 13 and 27 February, 2021 the largest changes across industry were:

Payroll jobs: Administrative & support services and Education & training both increased by 2.8 per cent. But Agriculture, forestry and fishing decreased by 1.8 per cent.

Total wages: Administrative and support services and Public administration and safety both increased by 2.8 per cent. Information media and telecommunications increased by 2.7 per cent.

Employment size payroll jobs: Under 20 employees (-0.8 per cent); 20-199 employees (+0.3 per cent); 200 employees and over (+1.2 per cent).

The Commonwealth Bank (CBA) Household Spending Intentions Series (HSI) – February

• According to CBA economists, “The Commonwealth Bank Household Spending Intentions series for February 2021 showed mixed results across the seven spending categories, but overall continued to point to ongoing improvement in household spending in the Australian economy.”

• And, “Home Buying, Health & fitness, Entertainment and Education spending intentions all improved in February 2021. Travel and Motor vehicle spending intentions were flat on the month, while Retail spending intentions softened a little.”

What is the importance of the economic data?

• The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.

• The Australian Bureau of Statistics releases data on overseas arrivals and departures, produced monthly and is an indicator of the health of the tourism sector. The figures are also useful in understanding spending trends and tracking migrant numbers – an indicator with widespread implications for employment, housing and spending.

• The ABS data Weekly payroll jobs and wages “provides indicative information on the economic impact of the COVID-19 coronavirus on employees, including changes in employee jobs, changes in total wages, and changes in average weekly wages per job.”

• The focus of the Commonwealth Bank (CBA) Household Spending Intentions Series (HSI) is on Australian households and their spending intentions. The approach is to employ the near real-time spending readings from CBA’s household transactions data, combine them with relevant search information from Google Trends data and map the results to the official data on consumer spending.

What are the implications for investors?

• The Aussie labour force survey is released on Thursday. CBA Group economists expect around 30,000 jobs to be added in February with the unemployment rate easing from 6.4 per cent to 6.2 per cent.

• Also on Thursday, population data is issued for the September quarter, 2020. The impact of closed international borders is also evident in more recent figures with net departures from Australia totalling 20,790 over the 10-month period to January, 2021. CommSec estimates annual population growth to fall to just 0.7 per cent in December 2020. And population growth is expected by policymakers to fall to the slowest annual rate since World War I at just 0.2 per cent in 2021.

Important Information

The information presented in this email is an extract of a CommSec Economic Insights report. The full report is published on the CommSec website (under Market News > The Markets). The extract and report are approved for distribution in Australia only and must not be directed or distributed to any person or entity outside Australia, except with the prior approval of your Business Unit Compliance team.

The extract has been prepared without taking into account your objectives, financial situation or needs. It is not to be construed as a solicitation or an offer to buy or sell any securities or financial instruments, or as a recommendation and/or investment advice. Before acting on the information in this report, you should read the full report and corresponding disclaimers, and consider the appropriateness and suitability of the information, having regard to your own objectives, financial situation and needs and, if necessary, seek appropriate professional of financial advice.

Published by Ryan Felsman, Senior Economist, CommSec