The Australian employment numbers were released this week.
On the face of it the news was encouraging. The unemployment rate dropped from 5.7 per cent to 5.5 per cent.
This was despite a reduction of 30,630 jobs during April. Full-time positions increased by a solid 33,800 to 8.89 million, while part-time jobs experienced a big fall, down by 64,400 to 4.15 million.
You might be asking yourself ‘how can the unemployment rate decrease when the number of people without a job in Australia increased’?
Don’t worry, you’re not the only one who finds that hard to wrap your head around.
The answer or explanation is that a lot of people decided they no longer needed or wanted a job, and that number was bigger than the number of jobs that were lost during the month of April. That could be people retiring, seasonal workers, expectant mothers etc.
Either way, the news is generally positive because most people were expecting as many as 100,000 Aussies to lose their jobs once JobKeeper ended. That hasn’t been the case. In fact, although we lost 30,600 jobs in April, we added 77,000 during March, so we’re still ahead across the two months combined.
The Australian unemployment rate is sitting just 0.2 per cent above where it was at the start of the pandemic and nearly 2 per cent below the 7.4 per cent it peaked at in July 2020.
Social demographer, Bernard Salt, had an interesting perspective on that topic over the weekend.
In previous blogs we’ve talked about how the Reserve Bank of Australia want wage growth of 2 per cent to 3 per cent before it will increase interest rates. Wage growth today sits at 1.4 per cent, and the RBA and Australian Government believe the unemployment rate needs to get to between 4 per cent and 4.5 per cent before we will see wage growth in that range.
Well, Bernard Salt had an interesting and alternative perspective on that.
His opinion was that “an unemployment rate somewhere in the 5 per cents in a closed-border Australia is the equivalent of full employment in an open-border Australia. The reason is for 12 months we have not had access to skilled immigration, skilled temporary workers, seasonal workers, foreign student workers and backpackers to fill gaps where skills and labour are needed.”
He went on to say “it would seem many jobs normally taken by workers sourced from overseas are being snapped up by Australian-based workers. The problem is that even with an unemployment rate of 5.5 per cent, hopefully trending to somewhere in the 4 per cents, there’s still a requirement for more skills and labour in different parts of Australia.”
Effectively, without migration it may well be that we see wage growth set in when unemployment is at 5 per cent or so because the jobs being created require a skillset or experience that new entrants to the workforce (i.e. young Aussies) and those looking for a job aren’t qualified to fill.
While he’s probably in the minority on that front, it is an interesting perspective that I think makes a lot of sense. We will know sooner or later.
According to the Australian Bureau of Statistics, in the 12 months to February 2021, most net new jobs were created in positions such as sales assistants, up 41,000 positions, store persons, up 34,000, and accountants, up 31,000.
Of these top three high-growth jobs, only sales assistants require minimal training.
Changing topics, we talked about the outrage coming out of the Victorian State Budget last week. Well, if you sifted through the political nonsense, some interesting data did come out of that update. The Victorian government confirmed first-home buyers accounted for 78 per cent of all settled transactions in outer metropolitan and regional Victoria since March last year.
To put that in perspective, that number normally sits between 20 per cent and 30 per cent.
What’s more in the past 12 months, 81 per cent of housing transactions settled in regional Victoria were for less than $600,000, in contrast to 47 per cent in greater Melbourne.
Given that the median house price in Melbourne today sits at about $870,000 today, we think those numbers are encouraging. Clearly a lot of Australians are taking advantage of a once in a lifetime opportunity!
Finally, as we enter the last weekend of Autumn, the auction market is showing no sign of slowing down.
Of the 2,892 homes taken to auction last weekend, the national clearance rate was sitting at 79 per cent. Sydney continued to lead the charge with a clearance rate of 81.6 per cent from 1,149 auctions. Melbourne continued its run of high 70 per cent clearance rates with 77.6 per cent clearance rate from 1,330 auctions. Clearance rates were above 70 per cent in all markets except Perth (60 per cent).
The final clearance rate has now been above 77 per cent nationally for the last 15 weeks in a row!
John has always advised us in a rising market to “buy before we sell” – specifically to buy a new home before we sell our current one. That’s certainly the case out there at the moment with lots of buyers around (i.e. easy to sell) and house prices increasing by $10,000 to $20,000 per month in most markets throughout Australia (i.e. difficult to get back in, impossible to do so at the same price if you sell before you buy).
Interested in knowing more? Check out the weekly podcast we do at The Double Shot Podcast.
James and Alex