Job vacancies hit record high; Retail spending eases

Record loans for new home building; Big trade surplus
Job vacancies; Lending indicators; Retail trade; International trade

Job vacancies: In seasonally adjusted terms, job vacancies rose by 13.7 per cent or 34,800 to a record 288,700 available positions in the three months to February. Vacancies are up 26.8 per cent or 61,000 available positions in February compared with a year ago.

Home loans: The value of new loan commitments for housing fell by 0.4 per cent from a record high $28.75 billion in January to $28.64 billion in February (consensus: +2.5 per cent). Lending to investors rose by 4.5 per cent in February to 3-year highs of $6.94 billion, while lending to owner‑occupiers fell by 1.8 per cent to $21.70 billion. For owner-occupiers, the value of loans for construction rose 4.4 per cent in February to a record high $4.25 billion. Renovation loans rose 8.3 per cent to 11-year highs of $322.4 million.

Retail trade: Retail spending fell by 0.8 per cent in February (consensus: -1.1 per cent) to be up 9.1 per cent on the year. Spending fell 5.4 per cent in Western Australia and 3.0 per cent in Victoria in February. Food retailing fell 3.0 per cent in the month with spending on liquor down 5.6 per cent.

Foreign trade: The trade surplus decreased from a record $9.616 billion in January to $7.529 billion in February (consensus: $9.872 billion). Australia has posted 38 successive monthly trade surpluses. The rolling annual surplus lifted from $79.916 billion in the year to January to a record $84.351 billion in the year to February.

The job vacancies data is a leading indicator of the job market and therefore important for consumer-focussed stocks and companies. Lending finance data has implications for banks, retailers, developers, building and building material companies. Retail trade data is important for consumer-focussed companies. 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 all mean?

• Momentum in the Aussie jobs market was strong prior to the JobKeeper wage subsidy expiry. Leading indicators of employment growth were very healthy in February. In fact, the Bureau of Statistics (ABS) measure of job vacancies hit a record high 288,700 available positions in the month. Recruitment activity has strengthened with vacancies up 26.8 per cent compared with a year ago. Job ads have surged across all states and territories with the snap-back in hiring for the Covid-19 affected Accommodation & food services industry (up 12,900 positions over the year to February) particularly encouraging ahead of the end of JobKeeper. Of course, the residential property boom is fuelling strong demand for construction workers (up 10,100 positions over the year to February).

• Home lending eased in February off record highs in January. But the value of investor home lending hit 3-year highs of $6.94 million. And on the back of the HomeBuilder scheme, the value of loans for construction to owner-occupiers rose by 4.4 per cent in February to a record high $4.25 billion. Renovation loans rose 8.3 per cent to 11-year highs of $322.4 million.

What do you need to know?

Job vacancies – February

• In seasonally adjusted terms, job vacancies rose by 13.7 per cent or 34,800 to a record 288,700 available positions in the three months to February. Vacancies are up 26.8 per cent or 61,000 available positions in February compared with a year ago.

• Private sector vacancies lifted by 14.0 per cent to 260,300 over the three months to February. And public sector vacancies rose 11.1 per cent to 28,400 over the period. Private sector vacancies are 28.5 per cent higher in February than a year ago. Public sector vacancies are 12.8 per cent higher than a year ago.

• In seasonally adjusted terms, over the three months to February changes in vacancies across states and territories were: NSW (up 13.6 per cent); Victoria (up 12.4 per cent); Queensland (up 11.8 per cent); South Australia (up 24.2 per cent); Western Australia (up 6.8 per cent); Tasmania (up 10.2 per cent); Northern Territory (up 13.1 per cent) and ACT (up 3.5 per cent).

• Vacancies rose by 31,800 or 12.3 per cent in original terms in the three months to February. In terms of industries, 15 out of 18 industries recorded higher vacancies. Vacancies rose the most in Construction (up 8,800), followed by Accommodation and food services (up 5,200) and Professional, scientific and technical services (up 4.2 per cent). But vacancies decreased for Public administration and safety (down 1,700), followed by Arts and recreation services (down 1.4 per cent) and Retail trade (down 800).

• In seasonally adjusted terms, annual changes in vacancies across states and territories were: NSW (up 18.5 per cent); Victoria (up 10.0 per cent); Queensland (up 39.6 per cent); South Australia (up 65.6 per cent); Western Australia (up 44.8 per cent); Tasmania (up 66.0 per cent); Northern Territory (up 68.0 per cent) and ACT (up 22.8 per cent).

• In the year to February, vacancies rose by 61,500 or 26.8 per cent in original terms. Seventeen out of 18 industries recorded higher vacancies. Vacancies rose the most Accommodation and food services (up 12,900), followed by Construction (up 10,100) and Health care and social assistance (up 9,300). But vacancies fell in the Administrative and support services (down 2,600).

Lending – February

• The value of new loan commitments for housing fell by 0.4 per cent from a record high $28.75 billion in January to $28.64 billion in February.

• Owner-occupier loans were down 1.8 per cent from a record high $22.11 billion in January to $21.70 billion in February. But investor loans were up by 4.5 per cent to 3-year highs of $6.94 billion.

• For owner-occupiers, the value of loans for construction rose 4.4 per cent in February to a record high $4.25 billion. Renovation loans rose 8.3 per cent to 11-year highs of $322.4 million. The adjacent table has details of lending per category.

• The value of owner-occupier first home buyer loan commitments fell by 4.0 per cent in February to be up 66.8 per cent on the year.

• The seasonally-adjusted value of first home buyer loan commitments accounted for 31.7 per cent of all owner-occupier commitments (excluding refinancing) in February – below 11-year highs in December 2020.

• The number of owner-occupier first home buyer loan commitments decreased 3.3 per cent in seasonally adjusted terms from an 11½-year high of 16,664 (41.6 per cent of all loans) in January to 16,117 in February (40.6 per cent of all loans).

Retail trade – February

• Retail trade fell by 0.8 per cent in February, but was still up by 9.1 per cent on a year ago.

• Details of spending by industry are in the accompanying table. Footwear and other personal accessory retailing rose the most (up 2.8 per cent) from Cafes, restaurants and catering services (up 2.5 per cent); and Electrical and electronic goods retailing (up 2.4 per cent). But Liquor retailing fell 5.6 per cent.

• Across states and territories in February: NSW (up 1.2 per cent); Victoria (down 3.0 per cent); Queensland (up 1.1 per cent); South Australia (up 0.2 per cent); Western Australia (down 5.4 per cent); Tasmania (up 0.7 per cent); Northern Territory (down 2.8 per cent); ACT (up 0.3 per cent).

International trade – February

• The trade surplus decreased from a record $9.616 billion in January to $7.529 billion in February (consensus: $9.872 billion). Australia has posted 38 successive monthly trade surpluses.

• The rolling annual surplus lifted from $79.916 billion in the year to January to a record $84.351 billion in the year to February.

• Exports of goods and services fell by 1.3 per cent (exports of goods fell by 1.1 per cent).

• Imports of goods and services rose by 5.2 per cent (goods imports rose by 5.5 per cent).

• Rural exports lifted 6.6 per cent, but exports of non-rural goods fell by 3.3 per cent. Gold exports lifted by 6.5 per cent.

• Within imports, consumer imports rose by 2.7 per cent; capital goods imports fell by 0.7 per cent and intermediate goods imports surged by 12.9 per cent.

• A net services surplus of $871 million was posted in February, down from a $1.163 billion surplus in January.

• Exports to China fell by 8.0 per cent to $11,350 million in February while imports from China rose 1.0 per cent to $6,808 million.

• Australia’s annual exports to China rose from $146.55 billion in January to $148.27 billion in February. Exports to China are down just 0.1 per cent on a year ago.

• Australia’s annual imports from China rose from $83.98 billion in January to a record $86.58 billion in February. Annual imports were up 12.0 per cent on a year ago.

• Australia’s rolling annual trade surplus with China fell from $62.57 billion in January to $61.70 billion in February.

What is the importance of the economic data?

• The Australian Bureau of Statistics releases Job Vacancies data each quarter. The data is useful in gauging the strength of the job market.

• “Lending Indicators” is released monthly by the Bureau of Statistics and contains figures on new housing, personal, commercial and lease finance commitments. The importance of the data lies in what it reveals about the appropriateness of interest rate settings, confidence and spending levels in the economy.

• The Bureau of Statistics’ Retail trade publication contains the most current readings on the performance of consumer spending. The ABS surveys 500 ‘larger businesses’ and 2,750 ‘smaller businesses’. Retail trade covers spending at a broad range of retail outlets but excludes both petrol and motor vehicle sales. A weak retail trade result may point to a slowing economy as well weighing on the share prices of listed retail stocks. But retail trade estimates can’t be assessed in isolation – it is important to look at the influences determining future trends in consumer spending, such as income, employment and confidence levels.

• The monthly International Trade in Goods and Services release from the Bureau of Statistics provides estimates on exports and imports of physical goods (such as coal, beef and computers) and services (such as travel receipts). The balance of goods and services (BOGS) is a narrower description of Australia’s external position than the current account estimates. The import data is a useful gauge of consumer and business spending while exports reflect global demand as well as domestic influences such as drought.

What are the implications for investors?

• Solid jobs growth is still expected over 2021 as the loss of jobs following the expiry of JobKeeper is expected to be absorbed by job gains outside the heavily-impacted tourism, arts & recreation and transport industries. But there are reports of skills shortages emerging across the strongly performing sectors of the economy and mis-matches between workers’ skills and employer’s job specifications. Prolonged international border closures could exacerbate skills shortages.

• The retail and international trade data is ‘old news’. Preliminary readings had already been released during March. In terms of the key takeaways, retail spending fell by 0.8 per cent in February to be up 9.1 per cent on the year. Spending fell 5.4 per cent in Western Australia and 3.0 per cent in Victoria in February due to snap lockdowns in both states. Food retailing fell 3.0 per cent in the month with spending on liquor down 5.6 per cent.

• Australia’s trade position remains healthy with a 38th successive trade surplus posted in February. Iron ore exports eased from record highs in January (down by $1.1 billion), but rural exports rose by $261 million in the month as exports of cereals jumped on improving seasonal conditions.

• The outlook for Aussie iron ore exports looks promising. Shipments from Port Hedland climbed to 18.5 million tons in the week to March 26, up from 16.9 million tons the prior week, according to Global Ports data – the highest level since the week ended June 26, 2020.

Published by Ryan Felsman, Senior Economist, CommSec