Consumer confidence hits 16-month high

Payroll jobs & wages above pre-pandemic levels
Consumer confidence; Weekly Payrolls

Consumer confidence: The weekly ANZ-Roy Morgan consumer confidence rating rose by 1.7 per cent – the most in 9 weeks – to a 16-month high of 112.3 (long-run average since 1990 is 112.6). Sentiment is up by 72.0 per cent since hitting record lows of 65.3 on March 29, 2020 (lowest since 1973).

Consumer views on financial conditions: Last week, consumer views on ‘current financial conditions’ jumped 4.4 per cent to a 12-month high of 3.3 points. And consumer views on ‘future financial conditions’ rose 4.1 per cent – the most since August 2020 – to 26.8 points.

Survey of payrolls & wages: The Bureau of Statistics (ABS) reported that national payroll jobs rose by 0.2 per cent, but wages paid fell 1.0 per cent over the fortnight to March 13, 2021. Payroll jobs were 0.2 per cent above levels at the start of the pandemic (since Australia recorded its 100th confirmed case of Covid-19 on March 14, 2020). And wages were 1.4 per cent higher over the period.

The consumer confidence and household spending intentions figures have implications for retailers, and other consumer-focussed businesses. The payroll and wage data helps government with decisions on assistance measures for households and businesses.

What does it all mean?

• New South Wales and South-East Queensland were ravaged by torrential rain and flooding last week, but consumer confidence held up. Sentiment, as measured by ANZ and Roy Morgan, rose 1.7 per cent last week – the most in 9 weeks – to a 16-month high. In March, the ANZ-Roy Morgan consumer confidence rating lifted 1.8 per cent, coinciding with the rollout of Covid-19 vaccines.

• The JobKeeper wage subsidy expired on March 28, but consumer views on ‘current financial conditions’ jumped by 4.4 per cent to a 12-month high of 3.3 points in the past week. And consumer views on ‘future financial conditions’ rose 4.1 per cent last week – the most since August 2020 – to 26.8 points. Of course, lower mortgage repayments are boosting household cashflows along with the recovery in the labour market, elevated savings and rising home prices, which have also boosted sentiment.

• According to ANZ economists, consumer confidence rose by 10.5 per cent in Brisbane last week. That said, Roy Morgan’s survey was conducted prior to yesterday’s announcement of a snap lockdown due a growing Covid-19 cluster. So sentiment could ebb this week as Easter holiday plans are dashed in the Sunshine State and Northern New South Wales.

• The recovery in Australia’s labour market continued mid-way through March. In fact, data from the Bureau of Statistics (ABS) and the Australian Taxation Office (ATO) show payroll jobs were 0.2 per cent above levels at the start of the pandemic (since Australia recorded its 100th confirmed case of Covid-19 on March 14, 2020). And wages are 1.4 per cent higher over the period.

• ‘Virus-free’ regions Western Australia and Northern Territory led job gains in the first half of March with payrolls both up 0.7 per cent. The tightening of the labour market saw wages lift 2.7 per cent in ‘the West’ and 2.5 per cent in the ‘Top End’ over the fortnight ended March 13, 2021 – supported by a massive 11.1 per cent lift in mining wages paid.

• That said, there are pockets of weakness evident in the figures. Over the fortnight, ended March 13, 2021, payroll jobs eased 0.4 per cent in Tasmania and by 0.1 per cent in both Victoria and South Australia. Wages paid fell 2.3 per cent in the ACT and 1.9 per cent in both NSW and Victoria over the fortnight.

What do you need to know?

Consumer sentiment – Week ended March 28

• The weekly ANZ-Roy Morgan consumer confidence rating rose by 1.7 per cent – the most in 9 weeks – to a 16-month high of 112.3 (long-run average since 1990 is 112.6). And confidence is up by 72.0 per cent since hitting record lows of 65.3 on March 29, 2020 (lowest since 1973).

Weekly payroll and wages – Week ending March 13

• The Bureau of Statistics (ABS) reported that national payroll jobs rose by 0.2 per cent, but total wages fell by 1.0 per cent over the fortnight to March 13, 2021.

• Payroll jobs were 0.2 per cent above levels at the start of the pandemic (since Australia recorded its 100th confirmed case of Covid 19 on March 14, 2020). And wages are 1.4 per cent higher over the period.

• Payrolls across state and territories over the fortnight to March 13, 2021: NSW (+0.2 per cent); Victoria (-0.1 per cent); Queensland (+0.5 per cent); South Australia (-0.1 per cent); Western Australia (+0.7 per cent); Tasmania (-0.4 per cent); Northern Territory (+0.7 per cent) and the ACT (flat).

• Over the fortnight to March 13, 2021, the largest changes across industry and employment size were:

Payroll jobs: Education & training (+2.3 per cent) and Retail trade (+1.9 per cent) increased the most. But Agriculture, forestry and fishing (-3.2 per cent) and Information, media & telecommunications (-2.5 per cent) fell most.

Total wages: Mining increased 11.1 per cent, but Information, media and telecommunications fell by 8.3 per cent.

Employment size payroll jobs: Under 20 employees (-2.1 per cent); 20-199 employees (-0.4 per cent); 200 employees and over (+1.7 per cent).

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 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.”

What are the implications for investors?

• The Aussie economy has recovered all the jobs and even added some since the depths of the pandemic recession in mid-2020. While the ‘snap back’ in the labour market has been extraordinary, the JobKeeper expiry and rolling ‘mini-lockdowns’ – in response to localised virus flare-ups – still present near-term downside risks to the jobs recovery.

• Commonwealth Bank (CBA) Group economists are expecting around 110,000 jobs in the heavily impacted Transport, Arts & recreation and Food & accommodation services industries to shed jobs in the coming weeks. And the Federal Treasury estimates that up to 150,000 JobKeeper recipients – currently working zero or minimal hours – could lose employment at the conclusion of the wage subsidy.

• That said, momentum in the labour market remains solid with recruitment activity pointing to further job gains, potentially absorbing the JobKeeper employment ‘cliff’. In fact, the National Skills Commission’s skilled internet job vacancies gauge hit 9-year highs in February and ANZ’s job advertisements rose to a 2½-year high of 174,000 vacancies in the same month. CBA Group economists tip ABS’ job vacancies to jump 10 per cent over the three months to February when released on Thursday.

• Any pause in the employment recovery will align with Reserve Bank Deputy Governor Guy Debelle’s view that, “I don’t think we’re through the bumps and unevenness yet. So it may not be a straight line from here.” Certainly the ABS weekly payroll jobs and wages data will take on even greater importance – despite some limitations with the data – with the monthly labour force survey unlikely to reflect significant job losses from the JobKeeper expiry until May’s released survey. Already, payroll jobs were down 2.1 per cent for Aussie businesses with less than 20 employees over the fortnight to March 13, 2021 – perhaps signalling some shedding of jobs by small and medium-sized enterprises (SMEs).

Published by Ryan Felsman, Senior Economist, CommSec