More confirmation yesterday that the Australian economy continues to drift towards the edge of a slide with a weak retail sales reading for May and the first fall in job vacancies for over a year.
According to the Australian Bureau of Statistics, retail sales rose just 0.1% in May, seasonally adjusted, half the market estimate of 0.2%, but better than the 0.1% dip in April.
The retail sales data confirms that household consumption (spending) remains weak which remains a primary concern of the Reserve Bank, along with slow wage growth (a linked area) and high household debt.
And ABS data, also released yesterday showed that job vacancies fell 1.1% in seasonally adjusted terms in the three months to May confirming that the labour market is slowing, a message that won’t be lost on the Reserve Bank. They were up 1.8% from a year ago.
A year ago job vacancies were growing at 26%. That is a substantial slide in growth in a year and adds to the impression that a rise in unemployment is on the cards.
The ABS said the number of vacancies fell to 241,500 from 244,00 in February. That was the first fall for close to two years.
The number of job vacancies in the private sector fell 1.1% to 219,400 in the three months to May. But that was up 1.2% on the May quarter last year.
The number of job vacancies in the public sector was 22,100 in May, up 3.7% from February and 7.8% on the May quarter of last year.
Many of these jobs are associated with health and welfare programs, such as the NDIS where most of the 333,000 jobs have been created in the past year.
Job vacancies in the retailing fell for the second quarter in a row to 19,000 from 20,800, confirming that it is the most sluggish sector.
Retail sales rose seasonally adjusted in Victoria by 0.6%, South Australia (0.5%), the ACT (0.7%), and the Northern Territory (0.5%).
There were falls in Queensland (0.3%), NSW, 0.1%, Western Australia (0.2%), and Tasmania (0.4%).
The trend estimate for Australian retail turnover rose 0.2% in May unchanged from April. Compared to May last retail sales were up 2.7% on a trend basis – double the inflation rate.
The ABS said that online retail turnover contributed 6.2% to total retail turnover in original terms in May 2019, a rise from 5.7% in April 2019 and 5.6% in May of last year.
In a commentary yesterday the AMP’a Chief Economist, Dr. Shane Oliver was downbeat.
“Payment of the $1080 tax rebate to low and middle income earners over the next few months (following the likely passage of the tax cut package through Parliament), the net boost to household spending power from the RBA’s interest rate cuts and signs that house prices may be at or close to the bottom will provide some support to retail sales,” he wrote yesterday afternoon.
“However, we remain of the view that retail sales growth will be weak going forward given the lagged negative wealth effect flowing from the fall in house prices since 2017 and likely very constrained house price growth ahead, continuing low wages growth and an upwards drift in unemployment.
“The slowing in job vacancies with annual growth having slowed from 26% a year ago to now just 1.8% is consistent with other forward looking labour market indicators in pointing to a slower labour market ahead and an upwards drift in unemployment.”