Job ads flatten; Subdued Chinese prices

Job advertisements; Chinese inflation

• Job advertisements: Job advertisements fell by 0.1 per cent in December after lifting by 1.1 per cent in November. It was only the first fall in job ads in five months.
• Chinese inflation: Chinese producer prices fell by 5.9 per cent over the year to December (forecast -5.8 per cent). Chinese consumer prices rose by 1.6 per cent over the year as expected.

What does it all mean?

• Job ads barely moved in December – in fact it was probably more noise than anything else, especially after the solid 1.1 per cent gain in November. The bottom line is that hiring is continuing with the authors of the job ads survey indicating that an average of just over 155,000 job ads were recorded in the month.
• It takes around 5-6 months from when the position is first advertised to the time the position is filled and the successful applicant starts work. So employment is tipped to continue, keeping unemployment near 6 per cent.
• The Chinese central bank has scope to stimulate the economy due to weak underlying price pressures.

What do the figures show?

Job Advertisements

• Job advertisements fell by 0.1 per cent in December after lifting by 1.1 per cent in November. It was only the first fall in job ads in five months and second fall in nine months. Newspaper advertisements fell by 1.2 per cent in the month, and the far larger component of internet ads fell by 0.1 per cent. Job ads are up 10.0 per cent on a year ago. In trend terms, ads rose by 0.8 per cent in the month, the 26th consecutive monthly gain, to be up 11.4 per cent over the year.

Chinese inflation

• Chinese producer prices fell by 5.9 per cent over the year to December (forecast -5.8 per cent).
• Chinese consumer prices rose by 1.6 per cent over the year as expected.
• In December, consumer prices rose by 0.5 per cent, up from the flat reading in November and up from the 0.4 per cent gain in prices recorded in November.
• Food prices rose 1.5 per cent in December while non-food prices were flat. Food prices were up 2.7 per cent over the year with non-food prices up just 1.1 per cent.
• Fresh vegetable prices soared 13.7 per cent in December with fruit up 2.3 per cent.
• Prices of Tobacco & Liquor; Clothing; and Household equipment & maintenance services were all flat in December. Healthcare prices rose 0.2 per cent while Transport & communications fell 0.2 per cent. The cost of petrol fell by 2.3 per cent in December.

What is the importance of the economic data?

• The monthly Job Advertisements release is a leading employment indicator. Employers only seek additional staff if business activity is strong, and more importantly, if they expect that conditions will remain favourable in coming months. It takes around 5-6 months for the new staff to be added to the payrolls. But a fall in job advertisements would have a more immediate impact on monthly employment estimates.
• China’s National Bureau of Statistics releases its monthly economic statistics around mid-month. Quarterly GDP data is released around the 16th of January, April, July and October. China’s Customs Office releases trade data, and the People’s Bank of China releases financial statistics, around the 10th of each month. China is Australia’s largest trading partner and changes in the Chinese economic have major implications for the Aussie economy.

What are the implications for interest rates and investors?

• Employers continue to look for staff, suggesting that net job gains will continue in coming months, although probably not at the current stellar pace. Over October and November, Australia notched the biggest back-to-back job gains in 28 years.
• The lift in employment together with lower petrol prices, discounting by retailers and firmer home prices in 2015 all point to ongoing solid growth in retail spending.
• Chinese inflation has edged up, but largely because of higher food prices. The prices of goods that are more affected by economic activity remain low, giving the central bank scope to stimulate the economy.