Mistrust over Australia’s seasonally-adjusted jobs figures continues to confuse what is truly happening in the labour market.
It’s creating a headache for policymakers and now it looks like it’s having a negative impact on consumer confidence levels — not a desirable outcome given strength in household consumption is required to help with Australia’s ongoing economic transition.
Take this morning’s ANZ-Roy Morgan consumer confidence index as an example.
According to ANZ, it slumped 3.6% to 113.6 last week, leaving it at the lowest levels since May.
While it still remains above its long-run average of 112.8, there’s been a noticeable shift lower from the multi-year peaks seen just a couple of months ago.
In trying to pinpoint the exact reason for week-to-week shifts in sentiment, Felicity Emmett, head of Australian economics at ANZ, reckons last week’s September jobs report likely played a role.
“We expect that last week’s labour market report showing ongoing weakness in full-time employment likely weighed on sentiment, while stock market falls over the past couple of weeks could also have dampened consumers’ view of the outlook,” she said following the release of today’s report.
According to the ABS’ seasonally-adjusted figures, full-time employment slumped by 53,000, the largest one-month drop in over five years. Taken on face value, it left full-time employment down on the levels of a year earlier, the first time that’s been seen since April 2014.
Though questions over the reliability of the data remain entrenched, it’s clearly having an impact on sentiment levels of households.
The breakdown of the survey backs this view, with most of the decline in the headline index last week due to souring sentiment towards the economic outlook.
“Households’ view of current economic conditions index fell 2.7%, while views towards economic conditions over the next 5 years fell a steeper 4.9%,” said ANZ.
There was also a noticeable decline in sentiment towards consumer finances in the year ahead which plummeted 7.1%, leaving it at lws not seen since September last year, more than a year ago.
Views on current consumer finances, along with whether now was a major household item, also weakened during the survey period, something that immediately followed the release of the ABS jobs report last Thursday.
Despite the obvious concern expressed by the September jobs report, Emmett says that labour market conditions and strength in Australia’s residential property market are likely to underpin confidence levels over the near-term.
“The labour market is still improving and this, coupled with ongoing housing market strength, should continue to broadly support confidence,” she says.