• Industry employment: Employment rose by 119,800 over the three months to August – the biggest quarterly increase in over almost a decade (since November 2004).
• Mining jobs fall: Mining employment fell by a record 27,100 jobs in the August quarter.
• More jobs in Education than Manufacturing. The number of people employed in the Education & Training sector now exceeds those employed in Manufacturing for the first time.

What does it all mean?

• The baton continues to be passed from mining to other parts of the economy. In the past three months, a record 27,100 jobs were lost in mining after falls in the previous six months. But more importantly, the jobs lost in mining and parts of the public service are being more than absorbed in other parts of the economy.
• The latest data confirms large scale job creation in the three months to August with more jobs created than at any three month period in a decade. More people in jobs, means more spending and therefore more momentum for the economy.
• Many Australians are still rubbing their eyes about the extent of job creation in the economy. But it is important to note that 97 per cent of businesses in the economy employ less than 20 people (88 per cent have less than four staff). And if small and medium-sized business picks up an extra worker here and an extra worker there, it all adds up.
• The Reserve Bank won’t be in a rush to change monetary policy settings. The RBA wants to ensure that the ‘baton change’ goes seamlessly and will make sure the baton isn’t dropped along the way.
• Australia continues to change from a manufacturing nation to that focussed on services. Thirty years ago manufacturing employed double the number of jobs as the education sector. Even a decade ago there were 30 per cent more people in manufacturing than education. Hopefully this new focus on education and training means a regular supply of productive staff for businesses.

What does the data show?

Industry employment:

• Economy-wide employment rose by 119,800 in the three months to August 2014 – the fastest growth in almost a decade (since the three months to November 2004). Over the year jobs rose by 252,500 – the most in three years.
• Employment rose in 13 of the 19 industry sectors. Employment rose most in Education & Training (up 31,800), followed by Health Care & Social Assistance (up 30,400) and Retail Trade (up 26,200).
• In the quarter, jobs fell the most in Mining (down by a record 27,100) followed by Administrative and Support Services (down by 23,400) and Public Administration and Safety (down by 14,900)
• Healthcare remains the biggest employer with 1.42 million employees (12.2 per cent of the total) followed by Retail Trade (1.26 million jobs or 10.8 per cent) and Construction (1.05 million or 9.0 per cent).
• Education & Training sector has passed Manufacturing for the first time in terms of people employed. Education & Training is the fifth largest employer with 937,600 jobs with Manufacturing at 917,900 jobs.

What is the importance of the report?

• The Australian Bureau of Statistics (ABS) provides detailed labour market figures one week after releasing ‘top level’ statistics of employment & unemployment levels across states and territories. The detailed data is useful in identifying broader underlying trends and instructive about the health of the economy.
• In the broader (macro) economy, the job market trends are positive. More in jobs, and more businesses looking for staff. The lift in productivity and weak wage growth are further positives for the hiring of staff. And more people in work, means more spending. Jobs lost in some sectors are being picked up in others.
• But at a regional level, the changes in the job market mean a degree of pain is being felt. Mining regions are shedding jobs, causing workers to travel farther afield to get jobs or to shift into other industries such as construction.
• The Reserve Bank will continue to monitor the ‘baton change’ but it must be happy with what it sees. Rates clearly won’t be cut in coming months, but it is still too early to talk about rate hikes, especially with inflation well contained.

What are the implications for interest rates and investors?

• In the broader (macro) economy, the job market trends are positive. More in jobs, and more businesses looking for staff. The lift in productivity and weak wage growth are further positives for the hiring of staff. And more people in work, means more spending. Jobs lost in some sectors are being picked up in others.
• But at a regional level, the changes in the job market mean a degree of pain is being felt. Mining regions are shedding jobs, causing workers to travel farther afield to get jobs or to shift into other industries such as construction.
• The Reserve Bank will continue to monitor the ‘baton change’ but it must be happy with what it sees. Rates clearly won’t be cut in coming months, but it is still too early to talk about rate hikes, especially with inflation well contained.

The post Jobs up most in a decade, but record fall in mining appeared first on AdviserVoice.

Highlights include:

• Gains & losses: The 39,500 job gain in Wholesale trade was the biggest quarterly rise for the sector in 20 years of records. The drop in manufacturing jobs was the biggest in almost three years.
• Reasons for being unemployed: Over the past year 22.7 per cent of unemployed people say they left their last jobs voluntarily – the lowest proportion in three years.
• Bank funding costs: The Reserve Bank says that funding costs and interest rates have fallen over the past year. And while spreads between lending rates and the cash rate have risen, this reflects strong competition for deposits.
• “Flash” manufacturing gauge in China: The HSBC flash manufacturing purchasing managers index rose from 50.4 to 51.7 in March, above forecasts set near 50.8.

What does it all mean?

• Last week we learned that employment surged in February. And today we learn where the jobs were created – or more precisely, how many jobs were created in the past quarter.
• The good news is that solid job growth has continued – more than 100,000 people found jobs over the past three months, the biggest quarterly rise in five years. And it was Wholesale Trade leading the way, accounting for almost 40 per cent of jobs created. This growth is likely to be part of the online spending boom. In the previous quarter it was Transport, Postal & Warehousing that lead the way in job creation, including courier drivers and warehouse facilities. This quarter it was Wholesale trade – a key sector in the chain linking producers or importers of goods with the end consumers.
• But the shift of spending to the online space may be causing jobs to shift from traditional retailers to wholesalers and importers. In the past quarter Retail trade jobs fell by 4,200 and there have been no net jobs created in the sector over the past two years. By comparison Wholesale trade was the biggest job creator over the past year, adding more than 65,000 jobs.
• The Education sector was second strongest in job creation over the quarter and has consistently created jobs over the past 18 months. More young people have been opting to stay in schools, colleges and universities rather than taking their chances in the job market.
• The Reserve Bank has published its latest report on bank funding costs and margins. And while the good news is that funding costs have fallen, the strong competition for deposits has prevented banks from passing through lower costs to borrowers. Depositors have been key winners in the shake-up caused by the global financial crisis and European debt crisis.
• There are various reasons why people become unemployed. Some lose their jobs; others leave their jobs voluntarily without another job to go to. And still others are former workers coming back into the workforce or are people looking for their first job.
• If you are confident about job prospects you may leave your job of your own accord. However it should be no surprise that just under 23 per cent of those who are unemployed left their last jobs voluntarily over the past year – the smallest proportion in three years and below the decade average. Clearly job confidence levels have eased markedly in recent years with the troubles in the US and Europe.
• The latest economic news from China continues to encourage and that is good news for the Australian resources sector.

What do the figures show?
Industry employment:

• Economy-wide employment rose by 102,400 in the three months to February – the biggest quarterly rise in five years. Almost 40 per cent of the jobs were created in one sector – Wholesale trade (up 39,500).
• The Bureau of Statistics says “units are classified to the Wholesale Trade Division in the first instance if they buy finished goods and then onsell them (including on a commission basis) to businesses.”
• Further: “Wholesalers’ premises are usually a warehouse or office with little or no display of goods large storage facilities and are not generally located or designed to attract a high proportion of walk-in customers. Wholesaling is often characterised by high value and/or bulk volume transactions, and customers are generally reached through trade-specific contacts.”
• Employment rose in 11 of the 19 industry sectors. Employment fell most in Manufacturing (down 30,800) followed by Arts and Recreation Services (down 10,200) and Electricity, Gas, Water and Waste Services (down 8,500).
• Healthcare remains the biggest employer with 1.39 million employees (12 per cent of the total) followed by Retail Trade (10.5 per cent) and Construction (8.8 per cent).

Analysis of Bank funding costs:
The Reserve Bank has issued its latest assessment of bank funding costs: “Developments in Banks’ Funding Costs and Lending Rates.”

• The Bank states: “The main findings are that the absolute levels of funding costs and lending rates have fallen over the past year, while spreads between these rates and the cash rate have widened. This latter development primarily reflects a continuation of strong competition for deposits.”
• The RBA says that lending rates have fallen in line with bank funding costs over the past year. While net interest margins shouldn’t have fallen, the RBA note that margins eased over 2012 due to a range of factors such as changes in the composition of bank assets.
• The RBA notes that spreads of funding costs and variable rate housing loans to the cash rate have moved similarly since June 2007.
• The RBA says that since June 2011 “increases in the cost of deposit funding and the level of compensation demanded by investors to hold bank debt, particularly in the first half of 2012, has seen estimated funding costs rise by a further 40–50 basis points relative to the cash rate.”

What are the implications for interest rates and investors?

• It is good news day. Data has confirmed that employment has continued to expand with job gains spread across a raft of sectors. Further, financial markets have absorbed the shock of the Cypriot parliament rejecting bail-out conditions. And there was also good news out of China with figures showing that the manufacturing sector continued to expand in the latest month.
• Latest figures confirm that jobs continue to be created across Australia. While there are structural pressures causing job losses in sectors like manufacturing and traditional retailing, other domestic-focused areas like wholesale trade, education, health and the public service continue to create positions.
• The latest Reserve Bank assessment of bank funding costs concludes that funding costs have been tracking in line with interest rates. Pressures still remain on margins and profitability in the banking sector due to community reluctance to take on new debt and the strong competition for domestic deposits.
• As Reserve Bank Deputy Governor Philip Lowe said on Tuesday, Australia is going through structural change, but the economy continues to perform well. Jobs are being created in some areas while being lost in others. But overall jobs continue to be created. Australia is positively responding to global challenges, the high Aussie dollar and information revolution.

The post Job market winners & losers appeared first on AdviserVoice.