A record number of people are in work. Job vacancies are also at record highs. A near record proportion

of Aussies are in the workforce. And the jobless rate is at decade lows. So clearly the job market is in good shape. A solid jobs market means that the Reserve Bank is more likely to remain on the interest rate sidelines. There doesn’t appear a near term risk of people losing jobs in a significant way, in turn prompting lower spending, lower business revenues and lower business profit

In the December quarter, there was the rare event with both home prices and share prices falling. As a result, wealth levels fell. But that is in the past. The March quarter will end in a few days and the share market, so far, is sitting on tidy gains of around 8%. But a rise in the value of share market assets will be partially offset by lower home prices – principally in Sydney and Melbourne,

What do the figures show? 

Employment rose by 68,000 in the three months to February after a gain of 54,800 in the previous three months. Over the past 12 months, 283,600 people have found jobs, down from 285,100 in the 12 months to November. A record 12.76 million Aussies are employed.

Over the year to February, 10 out of 19 sectors added jobs. The strongest gains were in Professional, Scientific and Technical Services (up 40,900), Other Services (up 32,700) and Public Administration and Safety (up 17,100).

In the three months to February, the number of jobs fell by the most in Manufacturing (down 57,700), Wholesale trade (down 21,500) and Construction (down 18,200).

Over the year to February, 11 out of 19 sectors added jobs. The strongest gains were in Public Administration & Safety (up 164,200), Professional, Scientific & Technical Services (up 104,800) and Wholesale Trade (up 43,100). The sectors that shed the most jobs over the past year were Manufacturing (down 62,500), Construction (down 49,300) and Retail Trade (down 24,700).

Health Care and Social Assistance remains the biggest employer with 1.7 million employees (13.3% of the total) followed by Retail Trade (1.28 million jobs or 10%), Construction (1.15 million or 9%) and Professional, Scientific & Technical Services (1.138 million or 8.5%).

What about job vacancies?

Job vacancies rose by 1.4% to a record 245,300 in the three months to February. Vacancies are up  by 9.9% on a year ago. In original terms, annual changes in vacancies across states and territories were: NSW (up 11.3%); Victoria (up 9.3%); Queensland (up 1.1%); South Australia (down 9.7%); Western Australia (up 32%); Tasmania (up 3.4%); Northern Territory (unchanged) and ACT (up 11.9%). Vacancies rose in 13 of the 18 industries over the past year. Vacancies rose the most in Construction (up 33.1%) from Healthcare & Social Assistance (up 23%). Vacancies fell 22.9% in Information, Media & Telecommunications. By sector, private sector job vacancies rose by 1.8% over the three months to February and by 10.1 over the year. Vacancies in the public sector fell by 1.7% but were up by 7.7% from a year ago.

Financial accounts

The ABS noted:Household wealth (net worth) decreased 2.1% in the December quarter 2018, driven by real holding losses on land and dwellings, and financial assets. The fall in household wealth is the largest since the September quarter 2011 (in percentage terms), and follows a 0.1% (revised) decrease in the previous quarter. Household wealth per capita decreased $10,198 to $404,320, following a $2,263 fall in household wealth in the previous quarter. This is the first consecutive decrease in household wealth per capita since the December quarter 2011.”

Households held a record $1,150.1 billion in cash and deposits at the end of December. Cash and deposit holdings represented 22% of financial assets, up from 21.4% in the June quarter, but below the 21.9% average since the global financial crisis and long-run average of 21.7%.

Households held $989.8 billion in shares or 18.9% of all financial assets in the December quarter, up from 18.7% in the September quarter, in-line with the average since the global financial crisis, but below the long-run average of 22.4%. 

Pension fund (superannuation fund) assets fell by $89.8 billion from record highs to $2,203 billion in the December quarter. Cash and deposits stood at 11% of financial assets, below the 13.1% average since the global financial crisis, but above the long-term average of 9.4%.

Foreigners held $548.5 billion of Aussie listed shares in the December quarter, down from a record $613.4 billion in the September quarter. Foreigners held 30.9% of total listed shares, below the 31.5% average since the global financial crisis and long-term average of 32.8%.

Why is the data important?

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.

The Australian Bureau of Statistics releases Job Vacancies data each quarter. The data is useful in gauging the strength of the job market.

The Australian Bureau of Statistics releases the Financial Accounts publication each quarter. The data covers assets, liabilities and financial flows for the key sectors of the economy. Figures on financial wealth help reveal the true state of household finances.

What are the implications?

The job market is very much in the Reserve Bank’s sights at present. The worry is that the globally-induced slowdown in activity could cause companies to trim staff. So far, that’s not the case. And that means there isn’t the necessity to trim the cash rate. If stimulus is required, tax cuts would be a better way of providing a boost. CommSec expects official interest rates to remain unchanged for the foreseeable future, but the leaning is toward lower interest rates.