Retail Turnover and Job Vacancies

Two new bits of economic data out yesterday and neither of them are particularly encouraging.

First, retail turnover figures came in unexpectedly strong. Retails turnover was:
🛍️ Up 0.7% MoM
🛍️ Up 4.2% YoY

This beat expectations by quite a bit and was significantly stronger than recent card spending data out of the big four would have suggested. Discretionary retail spending and eating out where the big drivers of the spending growth.

The ABS attributed some of the growth to sales events in May stimulating spending, but if that is the case, I have concerns about the June figure as big end of financial year sales have been prominent this year.

In any event, consumer spending still trending upwards will not be welcome news to the RBA. Especially when spending remains more than 15% above trend.

...
Second, job vacancy figures also came in stronger than expected, falling only 2% from February 2023, meaning there were still 431,600 vacant jobs in May 2023.

This one was way stronger than I was expecting. It's pretty remarkable that Australia has created more than 465,000 jobs this year and we still have more than 400,000 job openings.

These aren't the kind of job vacancy numbers you see from an economy that is about to roll over into a recession and they imply that unemployment may be staying low for a long time yet.

We normally have around 120,000 vacant jobs (just from the usual turnover process) and are adding about 36,000 people to to workforce a month. On that basis, we are around 8 months away from unemployment stating to rise significantly. The only heartening thing about all this, is we've had this situation essentially a year now and we aren't seeing wage growth get out of hand.

It still won't be welcome news for the RBA, who've been clear they want to see unemployment rise as a clear indicator of a slowing economy.

Both these prints turn the dial towards a further rate increase in July and I think its now a finely balanced choice with no real wrong option. Given the data over the last few weeks good arguments can be made for pausing to wait and see, or increasing again. June house price data might provide the tipping point next week.