Unemployment expectations hit record low

Consumer confidence; Payroll jobs & wages; Business turnover indicator

The Westpac-Melbourne Institute consumer confidence index rose by 0.6 per cent to 105.3 in November. The measure of unemployment expectations dropped (improved) by 11.1 per cent in November to a record low.

The Bureau of Statistics (ABS) reported that national payroll jobs rose by 1.3 per cent over the fortnight to October 16 with total wages down 0.9 per cent.

In September, the ABS monthly business turnover indicator showed falls in eight of the 13 industries due to lockdowns. The largest decrease in turnover was in Electricity, gas, water and waste services (-8.2 per cent).

Consumer confidence – November

• Consumer confidence improved in November as vaccination targets were met in some states, enabling further easing of government restrictions, boosting household mobility and lifting economic activity. The Westpac-Melbourne Institute Index of Consumer Sentiment rose by 0.6 per cent to 105.3 in November.

• In the survey conducted over the period November 1-6, Westpac economists reported that, “In recent months the success of vaccination rollouts has underpinned a confident consumer despite being in lockdown. This is best demonstrated by the confidence level of the 7.8 per cent of respondents who do not plan to get vaccinated with their confidence level at a disturbing 73.8 compared to confidence amongst the fully vaccinated at 106.5.”

• Encouragingly, ahead of the release of tomorrow’s October labour force survey, Aussie consumers expect the labour market to rebound sharply as Australia’s south-east exited Delta lockdowns. In fact, the measure of unemployment expectations dropped (improved) by 11.1 per cent in November to a record low (since January 1996) of 95.3.

• And three out of five of the major components of the index increased, with consumer views on the economy picking up in November. Notably, the ‘economic conditions next 12 months’ index increased by 3.3 per cent and the ‘economic conditions next 5 years’ index was up by 2.6 per cent – both well above long run averages. Also, the ‘time to buy a dwelling’ index rose by 9.4 per cent and the ‘house price expectations’ index fell by 2.4 per cent in the month.

• In response to a question about Christmas spending intentions, Westpac economists reported that, “The proportion of respondents who are planning to spend less is 26 per cent – the lowest proportion on record.”

• Of course, consumer confidence varies by region. In November, the biggest lift in sentiment occurred in NSW (+4.4 per cent) and Victoria (+0.8 per cent) as Covid-19 restrictions eased. Confidence also improved in rural areas (+2.6 per cent), but fell in metropolitan cities (-0.5 per cent). And sentiment surprisingly fell in relatively ‘Covid-free’ South Australia (‑5.7 per cent), Queensland (-2.8 per cent), Tasmania (-2.4 per cent) and Western Australia (-0.3 per cent).

Payroll jobs & wages – Fortnight to October 16

• The Bureau of Statistics (ABS) today reported that national payroll jobs rose by 1.3 per cent over the fortnight to October 16. Payroll jobs are up 0.5 per cent on a year ago and up 1 per cent since March 14, 2020 when Australia recorded its 100th new Covid-19 case.

• The data included the easing of lockdown restrictions in both NSW (October 11) and the ACT (October 15). In fact, in the week ended October 16, payroll jobs increased by 2.2 per cent in NSW and by 1.6 per cent in the ACT.

• Total national wages fell by 0.9 per cent over the fortnight to October 16 but were still up 6.6 per cent on a year ago.

• By gender, both female (+1.3 per cent) and male (+1.4 per cent) payroll jobs were higher over the fortnight to October 16. Payroll jobs worked by people aged 15-19 years increased by 2.9 per cent – the most of all age groups.

• Over the fortnight to October 16, the biggest payroll job gains were in the NSW (+3.5 per cent), followed by the ACT (+2.3 per cent), Victoria (+0.8 per cent) and Queensland (+0.4 per cent). But payrolls fell in Tasmania (-0.4 per cent), South Australia (-0.3 per cent), Northern Territory (-0.2 per cent) and Western Australia (-0.1 per cent).

• By industry, payroll jobs increased by the most over the fortnight to October 16 in the pandemic-hit Accommodation and food services (+5.6 per cent) and Arts and recreation services (+4.8 per cent).

• CBA Group economists expect tomorrow’s October labour force survey (conducted between September 26 and October 9), to show around 50,000 jobs added nationally. That said, the unemployment rate could lift from 4.6 per cent to 4.7 per cent with the participation rate up from 64.5 per cent to 64.8 per cent.

Monthly business turnover indicator – September

· The ABS’ “Monthly Business Turnover Indicator” is a timely indicator calculated from business activity statements (BAS) provided to the Australian Taxation Office and covers 13 of 19 industries, including mining, manufacturing, utilities, gas, water, construction, retail trade, wholesale trade, accommodation, and food services and transport.

· In September, the monthly business turnover indicator showed falls in eight of the 13 industries. The largest decreases in turnover were in Electricity, gas, water and waste services (-8.2 per cent) and Construction (-3.7 per cent). But turnover rose most for Accommodation and food services (+2.2 per cent) after four months of consecutive falls.

· While today’s release pre-dates the easing of lockdowns, labour shortages and rising input costs pose threats to Aussie corporate profitability, especially for domestic-focused businesses ahead of the busy Christmas trading period.

Published by Ryan Felsman, Senior Economist, CommSec