Females and young workers hit hardest by Sydney lockdown

Weekly payroll jobs; International trade

What happened? The Bureau of Statistics (ABS) reported that national payroll jobs fell by 2.4 per cent over the fortnight to July 17 but were up 3.3 per cent on a year ago. NSW payroll jobs fell 4.4 per cent with positions held by females (-5.1 per cent) and 15-19 year olds (-10.7 per cent) falling by the most. Payroll jobs in the NSW accommodation and food services and arts and recreation services industries dropped 18-19 per cent.

Implications: Covid-19 lockdowns across multiple capital cities have increased economists’ scrutiny of high frequency weekly payroll jobs data. Already indicators of labour demand, such as the ANZ measure of job advertisements have weakened, but the NSW JobSaver program and Covid-19 disaster payments may limit the damage to the labour market. That said, hours worked will fall sharply with the underemployment rate lifting.

Other data: The trade surplus increased from $9.3 billion in May to a record $10.5 billion in June. Australia has posted 42 successive monthly trade surpluses. The rolling annual surplus hit a record high $89.0 billion in the year to June. Exports to China rose by 8.2 per cent in June to a record $19.1 billion. Commonwealth Bank Group economists expect net exports to subtract 0.3 percentage points from June quarter economic growth (GDP).

The payroll and wage data helps government with decisions on assistance measures for households and businesses. The trade data is instructive on income flows in the economy and consumer and business activity and has implications for the currency.

What does it mean?

• Covid-19 lockdowns across major Aussie capital cities have increased economists’ scrutiny of high frequency Bureau of Statistics (ABS) and Australian Taxation Office (ATO) weekly payroll jobs data. Today’s release was sobering. National payroll jobs fell by 2.4 per cent over the fortnight to July 17, implying significant job losses, driven by government restrictions in NSW (-4.4 per cent) and Victoria (-1.9 per cent).

• While school holidays and direct government support payments (rather than through payrolls) may have overstated the job losses, the same devastating labour market trends are evident as seen in last year’s national lockdown. Payroll jobs decreased by the most over the fortnight to July 17 in the accommodation and food services sector (-8.7 per cent), due to shutdowns and social distancing measures.

• In NSW, payroll jobs in accommodation and food services (-19.0 per cent) and the arts and recreation services industries (-18.0 per cent) plunged. Females and younger workers in NSW have been hardest hit by Greater Sydney’s extended lockdown. In fact, positions held by females (-5.1 per cent), 15-19 year olds (-10.7 per cent) and 20-29 year olds (-7.4 per cent) all fell sharply in NSW over the first half of July.

• The damage to the labour market is broad-based. Nationally, payroll jobs worked by people aged 70 years and over decreased by 5.3 per cent in the fortnight to July 17, with jobs in agriculture, forestry and fishing down 7.7 per cent. And small businesses employing 20 employees or less shed the most jobs (-6.9 per cent) in the two-week period.

• Forward-looking indicators of labour demand, such as the ANZ measure of job advertisements also weakened in July, but the NSW JobSaver program and Covid-19 disaster payments may limit the damage to the labour market. That said, hours worked will fall sharply with the underemployment rate lifting between July and October.

• Commonwealth Bank (CBA) Group economists expect the unemployment rate to lift from 4.9 per cent in June to 5.6 per cent in October, before easing to 5.2 per cent by year-end. We also expect employment losses to amount to around 300,000 in NSW due to the extended lockdown in Greater Sydney.

• Australia’s iron ore income windfall continues thanks to insatiable Chinese demand. Income from the steel-making ingredient is boosting Australia’s economy by around $3 billion per week, according to Bloomberg estimates. In June, Australia shipped a record $17.6 billion worth of iron ore with prices up around $US10 a tonne to US$213 a tonne. Exports to China rose by 8.2 per cent in June to a record $19.1 billion, lifting annual exports to an all-time high of $165.7 billion, up 10.2 per cent on a year ago. Australia’s overall export earnings rose by $1.5 billion or 3.6 per cent in June with rural exports up a solid 6.9 per cent, driven by record grain shipments. The strong performance of Australia’s trade sector is boosting the government’s fiscal position at a time when much-needed support to the hard-hit domestic economy is being increased.

What do you need to know?

Weekly payrolls – Fortnight ended July 17

• The Bureau of Statistics (ABS) reported that national payroll jobs fell by 2.4 per cent over the fortnight to July 17 but were up 3.3 per cent on a year ago.

• By gender, female payroll jobs decreased by 2.8 per cent with male payroll jobs down 2.0 per cent over the fortnight to July 17. Payroll jobs worked by people aged 70 years and over decreased by 5.3 per cent with jobs worked by 20-29 year olds down 3.9 per cent.

• Over the fortnight to July 17, the biggest payroll job losses were in NSW (-4.4 per cent), followed by the ACT (-2.4 per cent), Victoria (-1.9 per cent) and Tasmania (-1.7 per cent). Jobs were also lost in the Northern Territory (-1.5 per cent), South Australia (-1.4 per cent), Western Australia (-1.2 per cent) and Queensland (-1.1 per cent).

• Payroll jobs decreased by the most over the fortnight to July 17 in accommodation and food services (-8.7 per cent) and agriculture, forestry and fishing (-7.7 per cent).

• The ABS has suspended its wage estimates.

International trade – June

• The trade surplus increased from $9.3 billion in May to a record $10.5 billion in June. Australia has posted 42 successive monthly trade surpluses. The rolling annual surplus rose from $84.3 billion in the year to May to a record $89.0 billion in the year to June.

• Exports of goods and services rose by 3.6 per cent (exports of goods lifted by 3.6 per cent with services up 3.1 per cent). Rural exports climbed 6.9 per cent and exports of non-rural goods rose 2.3 per cent. Gold exports jumped 17.9 per cent.

• Imports of goods and services rose by 1.8 per cent (goods were up 0.8 per cent and services were up 1.0 per cent). Consumer imports dipped 0.7 per cent; capital goods imports lifted 7.1 per cent and intermediate goods imports rose by 1.2 per cent.

• Exports to China rose by 8.2 per cent to a record $19.1 billion in June and imports from China lifted 0.4 per cent to $6.8 million. Australia’s annual exports to China rose from $160.4 billion in May to a record $165.7 billion in June. Exports to China were up 10.2 per cent on a year ago.

• Australia’s annual imports from China fell from $87.7 billion in May to $87.1 billion in June. Annual imports were up 7.7 per cent on a year ago.

• Australia’s rolling annual trade surplus with China climbed from $72.7 billion in May to a record $78.7 billion in June.

Published by Ryan Felsman, Senior Economist, CommSec