Petrol price eases; Mixed signals on job hiring

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Weekly Petrol Prices; ANZ Job Ads

  • Weekly Petrol Price: According to the Australian Institute of Petroleum, the national average price of unleaded petrol fell by 2.1 cents in the past week to 141.0 cents a litre.
  • Job advertisements: ANZ job advertisements fell for the fifth straight month, down by 1.7 per cent in March after falling by 0.8 per cent in February. Ads were down by 6.0 per cent over the year.

The petrol figures have implications for retailers, especially petrol marketing groups. The job advertisements data is a leading indicator of the job market and therefore important for consumer-focussed stocks and companies such as SEEK.

What does it all mean?

  • Global oil prices rose on Friday to 5-month highs. Stronger-than-expected US job figures eased concerns for oil demand. The prospect of military action in Libya could also crimp crude supplies in country in the short term. But the number of US oil rigs in operation rose by 15 last week to 831, potentially leading to higher oil supplies. Brent crude rose by US94 cents or 1.4 per cent to US$70.34 a barrel and US Nymex rose by US98 cents or 1.6 per cent to US$63.08 a barrel. Over the week Brent rose by 2.9 per cent and Nymex rose by 4.9 per cent.
  • Melbourne petrol prices bottomed on Sunday after only 18 days in the down phase of the discounting cycle. The last down-phase cycle was 20 days. Sydney prices continue to fall on day 20 of the down phase. Across capital cities, petrol prices are in a range of $1.33-$1.47 a litre. Two months ago, unleaded petrol prices in major capital cities were in the low $1.20s. Having aid that, pump prices aren’t too different than a year ago.
  • The Bureau of Statistics reported that job vacancies rose 1.3 per cent in the February quarter to record highs and were up 13.9 per cent on the year. ANZ job ads have fallen for five months and are down 7 per cent on the year. The truth may lie somewhere in between. The mixed observations make it difficult for the Reserve Bank.

What do the figures show?

Petrol prices

  • According to the Australian Institute of Petroleum, the national average price of unleaded petrol fell by 2.1 cents to 141.0 cents a litre in the past week.
  • The metropolitan petrol price fell by 3.4 cents to 140.4 cents per litre, and the regional price rose by 0.4 cents to 142.1 cents per litre.
  • Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 4.3 cents to 138.9 c/l), Melbourne (down by 5.7 cents to 139.0 c/l), Brisbane (down by 6.0 cents to 139.4 c/l), Adelaide (up by 3.4 cents to 146.3 c/l), Perth (up by 1.6 cents to 143.2 c/l), Darwin (up by 0.3 cents to 139.8 c/l), Canberra (unchanged at 142.0 c/l) and Hobart (up by 1.9 cents to 146.2 c/l).
  • The smoothed gross retail margin for unleaded petrol was at a 2½-year low of 9.54 cents a litre.
  • The national average diesel petrol price was steady at 149.2 cents a litre over the week. The metropolitan price fell by 0.1 cents to 148.6 cents a litre with the regional price up by 0.2 cents to 149.7 cents a litre.
  • Today, the national average wholesale (terminal gate) unleaded petrol price stands at 132.4 cents a litre, up by 0.75 cents over the week. The terminal gate diesel price stands at 136.0 cents a litre, up 0.2 cents over the past week.
  • Last week, the key Singapore gasoline price rose by US$1.05 cents or 1.4 per cent to a 5-month high of US$77.10 a barrel. In Australian dollar terms, the Singapore gasoline price rose by 90 cents or 0.8 per cent last week to $108.21 a barrel or 68.06 cents a litre.
  • MotorMouth records the following average retail prices for capital cities today: Sydney 136.7c; Melbourne 144.1c; Brisbane 136.9c; Adelaide 138.5c; Perth 133.7c; Canberra 142.0c; Darwin 139.9c; Hobart 146.2c.

Job advertisements

  • ANZ job advertisements fell by 1.7 per cent in March (the fifth straight decline) after falling 0.8 per cent in February. Ads are down by 6.0 per cent on the year. Ads hit 7-year highs in May 2018.

What is the importance of the economic data?

  •  Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.
  • 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.

What are the implications for interest rates and investors?

  • Petrol prices are set to remain above the lows of late 2018 with the price of unleaded petrol likely to hover near $1.40-$1.50 a litre. Consumers are likely to stay cautious about spending on non-essential or discretionary items. The firmer petrol price is bad news for retailers.
  • The good news is that petrol retailers are keeping margins under control at a sensitive time for motorists, a time when global crude prices are rising. Petrol is the single biggest weekly purchase for most households so price changes have key effects on spending.
  • Over the March quarter the petrol price fell by around 9.0 per cent, taking around 0.2-0.3 percentage points off the quarterly change of the Consumer Price Index.
  • The ANZ job ads series isn’t lining up with the official measure of job vacancies from the Bureau of Statistics (as ANZ itself acknowledges). So data needs to be assessed carefully. The complication at present is that employers may be reluctant to hire staff ahead of the election. Hiring may also have moved to individual company websites and LinkedIn. If the job market was to lose momentum, the Reserve Bank will move closer to cutting interest rates.
  • CommSec expects interest rates to be unchanged for the foreseeable future. But the loss of momentum across global economies means central banks are skewed to more accommodative monetary policies.

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