• 

  The unemployment rate rose in August.

  Hiring again: Job advertisements rose by 1.5 per cent in August to a 17-month high.

• Bigger Chinese trade surplus: The Chinese trade surplus rose from US$47.3 billion to a record high of US$49.8 billion in August. Exports were 9.4 per cent higher over the year.

What does it all mean?

• The continued lift in hiring intentions by employers casts further doubt on recent data showing a jump in the jobless rate. In July, the unemployment rate rose from 6.0 per cent to 6.4 per cent, but in the background job ads continue to rise, now hitting the highest levels in 17 months. Job ads are a forward-looking indicator of the job market as opposed to the employment and unemployment data which reflect decisions made by employers up to six months earlier.
• The lift in job ads is clearly good news for consumer-facing businesses.
• The continued lift in Chinese exports is encouraging for Australian producers. Essentially the data tells us that demand in the US, other parts of Asia and selected countries in Europe and South America are rising. For a commodity producer such as Australia, that is good news – especially for the coal and iron ore sector that are facing falling prices at present.
• Of course the most favourable situation would be where Chinese exports and imports are both growing healthy annual rates. The softness in the Chinese property sector is keeping a lid on domestic economic conditions.

What do the figures show?

Job Advertisements

• Job advertisements rose by 1.5 per cent in August to a 17-month high after a 0.5 per cent gain in July. Newspaper advertisements rose by 1.8 per cent in the month and internet ads rose by 1.4 per cent. Job ads were up 7.7 per cent on a year ago. In trend terms, ads rose by 0.3 per cent, the 10th straight gain.

China trade data

• The Chinese trade surplus rose from US$47.3 billion to a record high of US$49.8 billion in August. Economists had forecast a US$40 billion surplus. Exports were up 9.4 per cent on a year ago (forecast +8.0 per cent) while imports fell 2.4 per cent (forecast +1.7 per cent). In July, exports were up 14.5 per cent on a year earlier with imports down 1.6 per cent.
• 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 10^th of each month. China is Australia’s largest trading partner and changes in the Chinese economic have major implications for the Aussie economy.
• The lift in the number of jobs being advertised will translate into higher employment over the next 5-6 months and hopefully lower unemployment. The lift in hiring intentions provides confidence to those in jobs. And the lift in job numbers will support higher spending. Overall the data is positive for retailers.
• The Aussie dollar was unmoved near US93.65 cents after the Chinese trade data.

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 10^th 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?

• The lift in the number of jobs being advertised will translate into higher employment over the next 5-6 months and hopefully lower unemployment. The lift in hiring intentions provides confidence to those in jobs. And the lift in job numbers will support higher spending. Overall the data is positive for retailers.
• The Aussie dollar was unmoved near US93.65 cents after the Chinese trade data.

The post Job ads at 17-month high; Record China trade surplus appeared first on AdviserVoice.

Weekly petrol prices; Job advertisements; Chinese trade & inflation data

• 

  Petrol prices rise by record amount.

  Petrol prices lift: According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol rose by a record 7.3 cents per litre to a 12-week high of 153.4 cents a litre in the week to December 8. The increase reflects the end of discounting cycles in large capital cities. But the wholesale (terminal gate) price also stands at a 12-week high, pointing to even higher pump prices ahead.

• Job Advertisements fell by 0.8 per cent in November with internet ads down 1.0 per cent and newspaper ads down 1.7 per cent.
• Chinese trade: Chinese exports rose by 12.7 per cent over the year to November while imports rose by 5.3 per cent. The trade surplus widened from US$31.1 billion to US$33.8 billion.
• Chinese inflation: Producer prices fell 1.4 per cent in the year to November, as forecast. Consumer prices rose 3.0 per cent over the year (forecast 3.2 per cent).

What does it all mean?

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• Retail spending rose by just 0.3 per cent in November after the 0.8 per cent slide in October. However Nonfood retailing rose by 0.5 per cent. Over the past year retail spending has risen by just 1.3 per cent – marking the second weakest reading in five years (surpassed only by the 1.0 per cent annualised growth rate in the year to May 2010).
• In annual terms, sales at chain stores were up 0.6 per cent on a year ago – the weakest annual growth in records going back 16 years. Sales at smaller retailers were up 2.4 per cent on a year ago.
• The job market is losing steam. The Advantage internet job index fell by 2.3 per cent in December – marking the biggest fall in job advertisements since July 2009.
• The national average terminal gate or wholesale price of petrol eased modestly from 26-month highs over the past week and stands at 123.4 cents a litre. However the weaker Australian dollar and rise in global oil prices is likely to see pump prices track higher in coming weeks.

What does it all mean?

• The Australian economy is losing momentum. Not only are manufacturing, services and construction sectors going backwards but retail spending is barely growing. And now there are signs that the job market is stalling.
• Job advertisements have recorded the biggest monthly fall in 18 months in December, adding to the weaker result in November. The labour market has been the shining indicator however the consecutive slide in the Advantage job index suggests that job growth going forward is likely to be much more sedate.
• The domestic economy is certainly facing headwinds, with the higher Australian dollar curbing tourism and making exports less competitive. At the same time the conservative attitudes of consumers have ensured that retail activity remains weak. In fact the slide in job ads in the retail sector was a substantial 12 per cent in December.
• Retailers have certainly done it tough over the past year. Annualised growth in sales is holding at a paltry 1.3 per cent – the second worst reading in more than five years and a far cry from the decade average growth of 6 per cent. In fact retail activity levels were much more buoyant during the global financial crisis, with annualised growth rates of around 6-7 per cent. It is clear that the cumulative rate hikes have taken their toll on the household budget, and as a result discretionary spending is being pared back.

• The tightening of monetary policy and unwinding of stimulus has been the key reason for the turnaround in the fortunes of the retail sector. The domestic economy is not shooting the lights out and retail activity is virtually non-existent. As the larger department and chain stores can attest, annualised sales are growing at the weakest levels in records going back 16 years. Even the modest 0.5 per cent lift in non-food retailing in November is hardly remarkable, especially when you consider that sales plummeted by 1.9 per cent in the prior month.
• A breakdown of the retail sales data across the states suggests that Queensland is faring far worse than other states. In smoothed terms retail sales in Queensland are growing at the slowest annual rate in records going back 28 years. However given the recent floods, there may be a pickup in activity levels as households replace damaged items such as furniture, carpets and start rebuilding.
• No doubt part of the slide in retail sales can be blamed on lower prices, rather than weaker spending, given the widespread discounting taking place across the retail sector. However weaker volumes are clearly playing their part. Prices of some goods are coming down because our dollar is strong, but plenty of retailers are cutting prices because consumers refuse to spend.
• Motorists need to prepare for higher petrol prices over the next fortnight. The wholesale price of petrol has eased modestly but the rise in the Singapore unleaded price and slide in the Australia dollar will filter through to pump prices over the coming fortnight. In fact in Australian dollar terms the Singapore unleaded price is trading at 27- month highs.
• Even retailers have been selling fuel in some states at or near cost – due to increased competition – and clearly this is an unsustainable scenario in the longer term. The bottom line is that pump prices are set to rise over the next couple of weeks.

What do the figures show?

Retail trade:

• Retail trade rose by just 0.3 per cent in November after a downwardly revised 0.8 per cent slide in October. Nonfood retailing rose by 0.5 per cent in November after the 1.9 per cent slide in the prior month. Over the past year retail trade lifted by just 1.3 per cent – marking the second weakest reading in five years (surpassed by the 1.0 per cent annualised growth rate in the year to May 2010).
• Sales by chain stores and other large retailers rose by 0.2 per cent in seasonally terms in November while sales by smaller retailers rose by 0.5 per cent. In annual terms sales at chain stores were up 0.6 per cent on a year ago – the weakest annual growth in records going back 16 years. Sales at smaller retailers were up 2.4 per cent on a year ago.
• During November, sales increased most at other recreational good retailers – including sporting, entertainment and toy retailers – (up 4.9 per cent), followed by furniture, floor coverings, and houseware goods retailing (up 1.5 per cent) and footwear and other personal accessory retailers (up 1.5 per cent). Sales fell most at newspaper and book retailing (down 1.3 per cent), followed by clothing retailers (down 0.3 per cent).
• Across the states sales lifted most in the ACT (up 1.0 per cent), followed by NSW and Tasmania (both up 0.6 per cent) and Victoria (up 0.2 per cent). Sales was weakest in the Northern Territory and South Australia (both down 0.9 per cent), followed by Western Australia (down 0.2 per cent). Sales were flat in Tasmania.

Petrol prices:

• The national average wholesale (terminal gate) price hit a 26-month low high of 124.2 cents a litre on December 31st but has eased marginally from those levels – down 0.8 cents over the week. Just over two months ago (October 1) the terminal gate price stood at an 11-month low of 111.6c/l.
• Last week, the key Singapore unleaded petrol price rose by US$2.18 (2.1 per cent) to US$105.35 a barrel. And in Australian dollar terms the Singapore gasoline price rose by $3.06 (3.0 per cent) over the week to $106.06 a barrel – a 2- month high.

Job advertisements:

• The Advantage internet job index fell by 2.3 per cent in December – “indicating an unexpected softening in the jobs market”. The authors of the report also note “An interest rate hangover brought about by seven consecutive rises and a grab for cash by the major banks late last year still appears to be having a negative impact on the job market. A weakening job market nationally, coupled with significant job losses in Queensland, is like to set a negative tone for early 2011”. In December gains were recorded in only engineering (1.7 per cent) and human resources (1.2 per cent). While significant losses were recorded by retail (-12.0 per cent), followed by tourism and hospitality (-10.8 per cent). All states were down except for Western Australia which recorded growth of 1.2 per cent in December.

What is the importance of the economic data?

• 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 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.
• Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum. National average retail prices are calculated as the weighted average of each State/Territory’s
  metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions.

What are the implications for interest rates and investors?

• The sluggish activity levels in the retail sector will need to turnaround pretty quickly to justify a further rate hike in the first half of 2011. Rather it is more likely that retailers will need to continue discounting in coming months especially given the economy was already struggling before the Reserve Bank delivered the November rate hike.
• Consumers will only start to spend again when they become more confident – an extended period of interest rate stability will help.
• The job market is still in good shape, but with the economy losing momentum, employment gains are likely to be much more subdued. Already the tourism, retail and hospitality sectors are curbing future
  employment with jobs ads sliding in December– adding a further drag on consumer spending and economic growth.

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• Petrol prices are set to rise – but modestly. The rally in the Australian dollar has been outpaced by gains in regional oil prices. According to the Australian Institute of Petroleum the national average retail pump price fell just 0.1 cents a litre last week to 123.5 cents a litre.
• The job market continues to strengthen. The Advantage internet job index rose by 2 per cent in October, led by gains in accounting and engineering. The ANZ index of job ads rose by 0.6 per cent – the weakest increase in six months.

What does it all mean?

• A lot of people of have been recently asking the question why has petrol prices not fallen given the recent rally in the Australian dollar? And it is the simple fact that the global oil price has been matching and in fact outpacing the gains in the Aussie dollar. The Nymex crude oil price reached fresh two year highs overnight, while the Singapore unleaded price is now holding at a just over six-month high in US dollar terms.
• Interestingly the recent strength in the global oil price is largely due to the weakness in the US dollar rather than a substantial rise in oil demand. The sharp slide in the US dollar across a basket of currencies has resulted in strong demand across the entire commodities complex. Investors are attempting to hedge US dollar exposure – a result that ensures even regional oil prices will remain well supported in the near term.
• While the Singapore unleaded price has recorded sharp gains, the strength of the Aussie dollar has ensured that any rise in domestic pump prices is likely to be more circumspect. The Singapore unleaded price has risen by 4.3 per cent in the past week while in Australian dollar terms the rise is a much more sedate 1.1 per cent. The recent strength of the Australian dollar has so far, been modestly outpaced by the rise in the global oil price. As such CommSec expects pump prices to rise by 1-2 cents a litre and hold close to $1.25 a litre in the next fortnight.
• While the economy appears to be struggling for momentum, one of the key leading indicators – job advertisements – is still pointing higher, albeit at a more sedate growth pace. According to the Advantage job index, jobs ads have now risen for an unprecedented 14 consecutive weeks. The ANZ job ads series has highlighted that job ads are holding at the best levels in 21 months, however the growth in job advertisements held at the weakest levels in six months.
• The sustained improvement in jobs growth and resulting limited capacity in labour market has been an area of Economic Insights Stronger Aussie dollar outpaced by gains in oil price November 8 2010 2
  concern for the Reserve Bank. However given the more modest improvement in jobs ads and the latest rate hike it is likely that jobs growth will be more circumspect in coming months. The cautious consumer attitudes that are prevalent will keep a lid on selling prices in the near term and as such businesses are likely to be more cautious about future hiring.

• In the longer term, sliding unemployment and a much tighter labour market are likely to be part of the economic landscape adding to inflationary pressures – particularly if growth holds above trend as the Reserve Bank growth forecasts suggest.
• For employers, the tasks of attracting and retaining staff will prove to be challenging over the next year. Generation Y are again looking at their best options in a more fluid job market and that may lead to higher wage costs as businesses try to keep staff happy.

What do the figures show?

Job advertisements:

• The Advantage internet job index rose by 2.0 per cent in October and job ads have now risen for an unprecedented 14 consecutive weeks. In October, gains were recorded in accounting (6.3 per cent) and
  engineering (5.4 per cent) but losses were recorded by human resources (-2.9 per cent) and legal (-2.8 per cent).
• The combined number of internet and newspaper job advertisements, as tracked by ANZ, rose by 0.6 per cent in October, the smallest gain in six months. Internet job ads rose by 0.6 per cent in the month, while newspaper job ads fell by 0.3 per cent. In annual terms job ads are up 34.6 per cent off a low base.

Petrol prices:

• According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 0.1 cents per litre to 123.5 cents a litre in the week to November 7.
• The metropolitan price rose by 0.1 c/l to 123.4 c/l, while the regional average price fell by 0.3 c/l to 123.8 c/l.
• Petrol prices across states in the past week were: Sydney (up 1.1 cents to 124.4 c/l), Melbourne (down 0.9 cents to 122.7 c/l), Brisbane (up 0.4 cents to 125.8 c/l), Adelaide (down 0.1 cents to 120.5 c/l), Perth (down 0.6 cents to 120.0 c/l), Darwin (down 0.7 cents to 126.9 c/l), Canberra (up 2.0 cents to 125.0 c/l) and Hobart (down 0.6 cents to 127.9 c/l).
• The national average wholesale (terminal gate) hit an 11-month low of 111.6 cents a litre on October 1. After hitting two month highs of 115.3 cents a fortnight ago, the terminal gate price is holding at 115.0 cents today. The key Singapore unleaded petrol price rose by US$3.83 (4.3 per cent) to US$93.63 last week. And in Australian dollar terms Singapore gasoline rose by $1.03 (1.1 per cent) over the week to $93.08 a barrel.

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.
• Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum. National average retail prices are calculated as the weighted average of each State/Territory’s metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions

What are the implications for interest rates and investors?

• The job market will be central to interest rate deliberations over the next year. Employers are still actively looking for workers – in part due to economic conditions but also in large part due to demographic influences and a reduction in migrants to fill vacancies.
• Given the anticipated pickup in economic growth over the next year, one of the best solutions is to increase migration, and thus labour supply, rather than to choke off demand with higher interest rates.

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