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Economics | October 7, 2020

Jobs & wages lift. Impact of shut foreign borders Payrolls & wages; Credit & debit cards

Survey of payrolls & wages: The Bureau of Statistics (ABS) reported that between September 5 and September 19, national payroll jobs rose by 0.3 per cent with Victorian jobs up by 0.4 per cent. National wages rose by 0.8 per cent over the period.

Card purchases: The value of all credit & debit card purchases eased by 0.7 per cent in August. Card purchases were up by just 0.6 cent on the year.

Overseas purchases: Before the foreign borders were shut, Aussies spent $1.7 billion on foreign purchases with their credit cards. In August, spending was just $664 million.

The payroll and wage data helps government with decisions on assistance measures for households and businesses. The credit & debit card spending data provides guidance for consumer-focussed businesses.

What does it all mean? The job market continues to heal as the Reserve Bank noted yesterday. The lift in wages and jobs over the

fortnight to mid-September supports the Reserve Bank decision to leave rates unchanged, rather than employing further monetary easing.

Before the foreign borders were shut, Aussies spent around $1.7 billion on overseas goods with their credit cards. Today, it’s more like $600-700 million. But the evidence so far is that the money that was typically spent on holidays overseas, hasn’t been fully deployed in the local market. So there are more opportunities for Aussie businesses if they can get consumers to part with their dollars.

What do the reports and figures show? Weekly Payroll and wages – September 19

The Australian Bureau of Statistics (ABS) has released the 12th edition of a new survey: “Weekly Payroll Jobs and Wages in Australia”.

In the period from September 5 to 19, Australian payroll jobs national payroll jobs rose by 0.3 per cent with Victorian jobs up by 0.4 per cent. National wages rose by 0.8 per cent.

Payrolls across state and territories from September 5 to 19: NSW (+0.3 per cent); Victoria (+0.8 per cent); Queensland (+0.5 per cent); South Australia (+0.7 per cent); Western Australia (-0.2 per cent); Tasmania (+0.3 per cent); Northern Territory (-0.2 per cent); and ACT (-0.95per cent).

Between the week ending 5 September and the week ending 19 September 2020 the

% Change in employee jobs from March 14 to September 19

2.7Public administration & safety2.4Electricity, gas, water & waste services2.3Financial & insurance services0.8Health care & social assistance-2Education & training

-2.7Mining-3.5Manufacturing-3.7Wholesale trade-3.9Professional, scientific & technical services-4.5Retail trade-5.5Construction-5.5Administrative & support services-5.8Other services-6.4Rental, hiring & real estate services-8.8Transport, postal & warehousing-9.1Agriculture, forestry & fishing-9.8Information media & telecommunications

-12.7Arts & recreation services-17.2Accommodation & food services

-4.1All industriesSource: ABS, CommSec

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Economic Insights. Jobs & wages lift. Impact of shut foreign borders

largest changes across industry were:

Payroll jobs: Accommodation and food services increased by 5.5 per cent and Education and training increased by 2.3 per cent

Total wages: Financial and insurance services increased by 10.1 per cent and Education and training increased by 2.8 per cent

Between the week ending March, 14, 2020 (the week Australia recorded its 100th confirmed COVID-19 case) and the week ending September 19, 2020:

Payroll jobs decreased by 4.1 per cent

Total wages paid decreased by 2.9 per cent.

Since the week ending 14 March 2020 the largest changes across industry were:

Payroll jobs: Accommodation and food services decreased by 17.2 per cent and Arts and recreation services decreased by 12.7 per cent.

Total wages: Accommodation and food services decreased by 12.3 per cent and Transport, postal and warehousing decreased by 10.9 per cent.

Payroll jobs: Those worked by people aged 70 and over decreased by 11.3 per cent and those worked by people aged 20-29 decreased by 6.3 per cent.

Total wages: Payments to people aged under 20 increased by 27.1 per cent and payments to people aged 70 years plus decreased by 7.2 per cent.

Credit and debit card lending - August

The average credit/charge card balance fell by 1.7 per cent to a 14-year low of $2,721.67 in August. The average limit eased from a record high (highest in 26 years) of $9,900.18 to $9,888.71 in August.

The number of credit and charge card purchases rose by 0.6 per cent in August but fell 5.4 per cent on the year.

The value of purchases made with credit and charge cards rose by 1 per cent in August but was down by 14.4 per cent on a year ago.

The number of overseas purchases rose by 12.3 per cent in August but fell 45.4 per cent on the year.

The value of overseas purchases rose 19.8 per cent in August but fell 60.9 per cent on the year.

The number of debit card purchases fell by 1.5 per cent in August, but were still up 9.4 per cent on the year. The value of debit card purchases fell by 1.9 per cent in August but were still up by 15.3 per cent on the year.

By value, the sum of credit & debit card purchases eased by 0.7 per cent in August. Card purchases were up 0.6 cent on the year. Smoothed annual growth (12-month average) eased from 2.6 per cent to 2.2 per cent.

The number of credit and charge card accounts stood at a 12-year low in August at 13.87 million, down from 13.96 million in July.

The number of debit card accounts rose 0.4 per cent to 40.4 million in August. Accounts are up 3.6 per cent on the year.

The number of ATM transactions continues to fall. The annual average of ATM withdrawals hit 20-year lows in August at 37 million.

What is the importance of the economic data? The ABS data Weekly payroll jobs and wages “provides indicative information on the economic impact of the

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Economic Insights. Jobs & wages lift. Impact of shut foreign borders

COVID-19 coronavirus on employees, including changes in employee jobs, changes in total wages, and changes in average weekly wages per job.”

The Reserve Bank releases data on credit and debit card transactions each month. The credit card figures are useful in highlighting consumer borrowing and spending trends.

What are the implications for investors? Before COVID-19, Aussies typically spent $1.7 billion a month on overseas purchases with their credit cards.

Some of the money would have been spent on on-line purchases. The rest would have be spent on overseas trips. But with foreign borders closed, clearly Aussies can’t spend hard-earned dollars on overseas vacations or business trips.

And while many Aussies are undertaking domestic trips instead, the evidence suggests that Aussies aren’t totally replacing domestic purchases for the foreign spending. And that observation is validated in part by the sharp rise in domestic saving in recent months. The shortfall also represents opportunities for domestic retailers. Some of the money may also being used on renovations, especially with more people working from home.

The new way of tracking the outlook for interest rates is to track job markets changes. The lift in jobs over the fortnight to September 19 points to some stabilization in the job market. But there is a long way to go. Rates are likely to be on hold for three years.

Craig James, Chief Economist, CommSec Twitter: @CommSec