Job shortages? Airfares slashed
Overseas arrivals & departures; Skilled job vacancies; Airfares
¾ Skilled job vacancies: The National Skills Commission reported that skilled internet vacancies rose by 1.6 per cent in January to be up 11.1 per cent on the year. Vacancies are at 19-month highs. Demand for labourers stand at 8-year highs. Demand for ‘Carers and Aides’ stands at record highs.
¾ Domestic airfares: New data shows that domestic airfares have consistently fallen over the seven months to February. Business airfares are at 7½-year lows. Discount fares are at 15-month lows and are falling at the fastest annual rate (in smoothed terms) in 8 years.
¾ Short-term arrivals: Overseas visitor arrivals rose by 16.5 per cent in December to 8,820 trips – the most since March. Arrivals are down by 99.2 per cent from a year ago.
¾ Short-term resident returns – short trips: Resident returns rose by 10 per cent in December to 14,300 trips – the most since June. Departures are down 98.1 per cent on a year ago.
Tourism data is important for airlines, hotels, shops and transport operators. Migration data is important for housing markets, retailers and government planners. Job ads/vacancies are an important gauge on the direction of consumer spending.
What does it all mean?
· Job vacancies now stand at 18-month highs, pointing to further falls ahead for the jobless rate. Will the end of JobKeeper pose major risks for the economic recovery? Some industries and individuals may face challenges, but the bulk of the workforce are back at their workstations. The removal of JobKeeper is still over a month away and it is a band aid worth removing.
· The most sought after positions are ‘Carers and Aides’; ‘Health & Welfare Support workers’ and a host of medical professionals. But the National Skills Commission also report that recruitment activity for labourers has lifted to 8-year highs with vacancies of construction and mining workers at decade highs in Western Australia.
· Airlines are hoping to speed up the transition to ‘normality’ by cutting airfares in an attempt to get more people in the air. Ultimately people will have confidence to fly when snap lockdowns become a thing of the past and when a high proportion of the population are vaccinated against Covid-19.
What do you need to know?
Tourism, migration & education – December
· In original terms, overseas visitor arrivals rose by 16.5 per cent in December to 8,820 trips – the most since March. Arrivals are down by 99.2 per cent from a year ago. The three leading source countries in December were New Zealand (2,520 trips); the US (1,100); and UK (880).
· Resident returns – short trips rose by 10 per cent in December to 14,300 trips – the most since June. Departures are down 98.1 per cent on a year ago. Main destinations were New Zealand (2,190 trips); the UK (1,240); and the US (1,180).
· In December, the number of short-term visitors arriving for educational purposes stood at 230. A year ago 38,460 students arrived in Australia to study.
· There were 11,030 people defined as ‘permanent or long-term departures’ in December. But there were 11,550 people defined as ‘permanent or long-term arrivals’. On balance, 520 people arrived in Australia in the month – the biggest net inflow in nine months.
Job vacancies – January 2021
· The National Skills Commission (NSC) reported that skilled internet vacancies rose by 1.6 per cent in January to be up 11.1 per cent on the year. Vacancies are at 19-month highs.
Skilled vacancies by state/territory: NSW (down 1.2 per cent); Victoria (up 1.8 per cent); Queensland (up 2.4 per cent); South Australia (up 0.1 per cent); Western Australia (up 6.4 per cent); Tasmania (down 3.8 per cent); Northern Territory (up 0.9 per cent); ACT (up 0.2 per cent).
· The NSC noted: “Job advertisements rose across seven of the eight broad occupational groups as well as four of the five skill level groups during January 2021. This reflects the increasing range of opportunities currently available to job seekers.”
· The Bureau of Infrastructure and Transport Research Economics (BITRE) has issued data on domestic airfares through to February 2021. In smoothed terms (13 month moving average), business class fares fell 5.3 per cent in February to be 18.6 per cent lower than a year ago. Smoothed restricted economy fares fell by 1.7 per cent in the month (down 3.7 per cent on the year) with smoothed ‘best discount’ fares down by 4.6 per cent in the month (down 9.1 per cent on the year – biggest annual fall in 8 years).
· Airlines have cut fares to boost patronage but arguably they may need to do more to get people flying again. Still, in smoothed terms, business class fares are at 7½-year lows while discount fares are the cheapest in 15 months and restricted airfares are the cheapest in two years.
What is the importance of the economic data?
· 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 National Skills Commission releases a monthly Internet Vacancy Index. The index is based on a count of online job advertisements newly lodged on three main job boards (SEEK, CareerOne and Australian JobSearch) during the month. The index is the only publicly available source of detailed data for online vacancies, including around 350 occupations (at all skill levels), as well as for all states/territories and 37 regions.
· The Bureau of Infrastructure and Transport Research Economics releases various data on domestic air travel including airfares. The data is helpful in gauging price pressures and conditions facing airlines.
What are the implications for investors?
· Businesses continue to hire new workers and re-hire existing staff. The interesting point at present is that there are more anecdotes of labour shortages developing – especially in residential construction. Detailed analysis of the job market by governments and the Reserve Bank is crucial at present.
· Labour shortages could stifle economic activity and generate inflation pressures a little too soon in the recovery period.
Published by Craig James, Chief Economist, CommSec