Consumer job worries hit decade low

Skilled job vacancies hit 12½-year high
Consumer confidence; Skilled job vacancies

• What happened? The Westpac-Melbourne Institute Index of Consumer Sentiment fell 4.8 per cent in May to 113.1 – the second highest reading since April 2010. The ‘unemployment expectations’ index fell (improved) by 15.3 per cent to a 10-year low of 100.2.

• The National Skills Commission reported that skilled internet vacancies rose by 3.3 per cent (or 7,800 job advertisements) in April to a 12½-year high of 243,500 available positions. Vacancies are 245.8 per cent higher than a year ago and 44.8 per cent above pre-Covid-19 levels.

• Implications: From an investor perspective, the data serves to highlight that interest rates are unlikely to be increased until spare capacity is eroded in the labour market and wages lift enough to quicken inflation growth. In this environment, Aussie shares continue to be supported by policy stimulus, the search for yield, more attractive dividend yields and a post-recession recovery in company earnings.

Job vacancies are a key gauge of future employment. The consumer confidence figures have implications for retailers, and other consumer-focussed businesses.

What does it all mean?

• Consumer sentiment, as measured by Westpac and the Melbourne Institute, fell sharply in May. That said, the gauge stands at the second highest level in 11 years. The survey part-captured consumer reaction to policy measures announced in the Federal Budget on May 11, as interviews were conducted over May 10-14. According to Westpac economists, “Responses to our annual Budget question show one in five consumers expect this year’s Federal Budget to improve their finances over the next 12 months. There has only been one more positive response in the eleven years we have run this question.”

• Encouragingly, Aussie households are more upbeat about their job prospects, despite the JobKeeper wage subsidy expiry. In fact, the measure of consumer ‘unemployment expectations’ index fell (improved) by 15.3 per cent in May to a 10-year low of 100.2 points.

• And why wouldn’t they be? There were 243,500 skilled job vacancies advertised online last month, according to the National Skills Commission. Vacancies are at the highest level since October 2008, lifting by the most in NSW (up 7.7 per cent) and Victoria (7.4 per cent) in April.

• Are skills shortages emerging? Certainly, the easing of Covid-19 government restrictions, greater mobility and a smaller pool of international workers – due to border closures – have made Hospitality workers highly sought after by prospective employers. In fact, Hospitality workers recorded the largest increase in job ads in April, up by 9.6 per cent to 900 available positions.

• Elsewhere, recruitment activity for health services and tradies are strong due to the health crisis and building boom. Community and Personal Service Workers hit an all-time high of 26,900 positions in April. Job ads for Professionals (67,800), Technicians and Trades Workers (35,800) and Machinery Operators and Drivers (13,000) are all at the highest level in more than 12 years. And there are 36,700 Clerical and Administrative Workers positions available with Sales Workers (19,500) and Labourers (19,200) both in demand.

• Attention now turns to tomorrow’s all-important labour force report. Commonwealth (CBA) Group economists expect that 40,000 jobs were added in April with the unemployment rate easing to 5.4 per cent from 5.6 per cent. With wage growth still tepid, continued job growth and increased hours worked both support household incomes and consumer confidence. Aussie households also have excess savings built up over the pandemic to deploy, but a switch in spending from goods to services is likely to occur as vaccination rates increase.

• From an investor perspective, today’s data dump serves to highlight that interest rates are unlikely to be increased until spare capacity is eroded in the labour market and wages lift enough to quicken inflation growth.

• Shares of ASX-listed online jobs market SEEK recently hit record highs after the company raised its financial year 2021 profit guidance with small and medium sized Aussie business recruitment activity at all-time highs. The company is also paying a dividend of 20 cents per share to investors on May 24 after its Zhaopin divestment.

• Aussie shares continue to be supported by policy stimulus, the search for yield, more attractive dividend yields and a post-recession recovery in company earnings.

Consumer confidence – May

• The Westpac-Melbourne Institute Index of Consumer Sentiment fell by 4.8 per cent in April to 113.1 – the second highest reading since April 2010. A reading above 100 points denotes optimism.

• The survey was taken over the period May 10-14.

• The current conditions index fell by 3.3 per cent. And the expectations index was down by 5.7 per cent.

• All five major components of the index fell in May:

Of the remaining sub-components, the ‘time to buy a dwelling’ index fell by 3.4 per cent to 103.5. The ‘house price expectations’ index edged 0.1 per cent lower to 163.8 – a smidgen below 7-year highs. The ‘unemployment expectations’ index fell (improved) by 15.3 per cent to a 10-year low of 100.2.

Job vacancies – April

• The National Skills Commission reported that skilled internet vacancies rose by 3.3 per cent (or 7,800 job advertisements) in April to a 12½-year high of 243,500 available positions. Vacancies are 245.8 per cent higher than a year ago and 44.8 per cent above pre-Covid-19 levels.

• Skilled vacancies by state/territory in April: NSW (up 7.7 per cent); Victoria (up 7.4 per cent); Queensland (down 1.3 per cent); South Australia (down 2.5 per cent); Western Australia (down 4 per cent); Tasmania (up 1 per cent); Northern Territory (down 0.3 per cent); ACT (down 3.8 per cent).

• Job advertisements increased in 43 of the 48 detailed occupational groups in April: Hospitality Workers (up by 900 job advertisements or 9.6 per cent) vacancies rose most, followed by Sales Assistants and Salespersons (up 790 job advertisements or 6.6 per cent), Food Trades Workers (up 740 job advertisements or 9.9 per cent), ICT Professionals (up 660 job advertisements or 5.5 per cent) and Carers and Aides (up 580 job advertisements or 5.5 per cent).

Published by CommSec