Two interesting developments from the economy yesterday.
The number of job vacancies in Australia bounced back strongly in the three months to August, while house prices are not as weak as many pundits had predicted.
Looking at the job vacancies the Australian Bureau of Statistics said that there was a massive 59% jump in the August quarter from the equally large fall in the three months to May.
Vacancies totalled 206,000 in August, regaining the 200,000 level that had held sway from November 2017 to May this year when they fell 43%.
That’s around 40,000 less than their peak in 2019.
Bjorn Jarvis, head of Labour Statistics at the ABS, said in a statement with the data: “Job vacancies rose sharply in the August 2020 quarter, following the largest fall on record in the May 2020 quarter, when vacancies decreased by 43 percent.”
“By August, vacancies were around 9 per cent below February, highlighting the extent of recovery from the fall in May,” Mr. Jarvis said.
Job vacancies in the private sector increased by 65% over the quarter, and by 22% in the public sector. Private sector vacancies were around 9% below February, and public sector vacancies were around 13% below.
“When compared with February 2020, the largest percentage increases were in the Northern Territory and Western Australia. Victoria, New South Wales, and the Australian Capital Territory recovered less than the other states and territories, remaining 23 percent, 22 percent, and 15 percent below February,” Mr. Jarvis said.
The three industries with the largest percentage increases in job vacancies in the August 2020 quarter were the three that saw the largest falls in May: Arts and recreation services; Rental, hiring, and real estate services; and Accommodation and food services.
Despite the recovery in the Arts and recreation services industry, its vacancies remained around 40 percent below February, following almost no vacancies in May, Mr. Jarvis added.
But house prices last month may have dipped in Sydney and Melbourne (the latter was not unexpected with the lockdowns), but there were rises in regional Australia and other major capitals.
Nationally, the CoreLogic monthly survey of house prices showed a tiny 0.1% dip in Australia-wide prices in September.
That’s despite falls in Sydney of 0.3% for the month which left them down 2.9% from their April peak, and a fall of 0.9% in Melbourne where prices are now down 5.5% from the March high.
Capital city average prices have now fallen 2.8% since their peak in April and the annual rate of price growth has slowed to 4.9% from a high of 9.7% in April
But the monthly pace of decline has slowed and six of the eight capital cities saw rising prices in September.
If Melbourne prices had not slipped by 0.9%, it’s likely there would have been a small national rise last month.
And regional prices rose 0.4% and last month and the AMP’s Dr. Shane Oliver says they “are likely to be stronger than cities reflecting lower levels of indebtedness and hence less vulnerability to the financial stresses caused by the economic downturn, less exposure to the slump in immigration and possibly increased buyer interest.”
Those confident (and gloomy) forecasts of a 10% fall in house prices look a little less likely.
The AMP’s Dr. Oliver though cautions against looking at house prices with too rosy a set of glasses.
“Prices have held up much better than feared back in March – but that’s mainly because JobKeeper, the increase in JobSeeker, the bank payment holiday and other support measures protecting heavily indebted households and property investors have headed off distressed sales,” he pointed out in a note yesterday.
And adding to the upbeat news on the strong rebound in job vacancies the monthly survey of Australian manufacturing produced the strongest rise in activity for two and a half years.
The survey, from Markit economics showed (https://www.markiteconomics.com/Public/Home/PressRelease/ced501932384460ea62fd7c8016a1879) a rise from 53.6 in August to 55.4 in September and “indicated a marked improvement in the health of the sector,” according to Markit.
“The average PMI reading for the third quarter of 54.3 reflected a solid turnaround for manufacturing when compared to the second quarter (46.4).
“The recovery in the Australian manufacturing sector gathered pace at the end of the third quarter, with the sector recording solid increases in both production and sales. The survey also showed export orders returning to growth in September.
“Firms added more workers for the first time in ten months amid a rise in capacity pressure. A sustained improvement in manufacturing conditions also boosted confidence, which rose to the highest since February 2019. Supply chains consequently came under greater pressure and inflationary pressures intensified.
“Driving the recovery was further growth in both output and new orders during September. Production volumes rose solidly for a third straight month amid greater demand for Australian manufactured goods.
“Inflows of new orders also increased for a third month in a row, with the rate of growth the strongest for over one-and-a-half years. This was partially lifted by a return to growth in export sales.,“ Markit said.