Households feel pinch on jobs and wage concerns   :(

August 11, 2019
The Age


Stagnant wages and growing concerns about the state of the jobs market is now weighing on the financial comfort of Australians with a new survey revealing hundreds of thousands of households barely holding their finances together.

Ahead of key wage and employment figures, the ME Bank six-monthly survey of financial comfort suggests the long period of slow income growth is leaving many people struggling to cover day-to-day bills.   :(

Despite the federal government's tax cuts and falls in official interest rates, the survey found a drop in financial comfort for most Australians since February.


ME's six monthly survey of financial comfort shows more Australians feeling the pinch from low wage growth and growing concern about the jobs market.

Comfort among working Australians dropped the sharpest with full and part-time workers all registering sizeable declines.


ME consulting economist Jeff Oughton said just a third of households reported an increase in annual income over the past year. The number of households getting more pay actually fell through 2018-19.

Combined with worries about the jobs market there were increasing fears in many households about their financial strength.

"It's clear from the latest report that there are increased concerns around job availability and under-employment," he said.   :(

"The number of workers who felt it would be difficult to find a new job increased by 16 per cent to over one in two employees which is the highest recorded since late 2016."

Reserve Bank governor Philip Lowe has urged state and federal governments to lift wages for public servants, arguing current caps have effectively "cemented" low income growth across the broader economy.

The federal government has rejected the calls, saying it is focused on delivering services to ordinary taxpayers and keeping the budget in surplus.

Financial comfort did increase for high-income households which covers those with more than $200,000 in income a year or who hold more than $1 million in their superannuation.

About 40 per cent of surveyed households spend all their monthly income. One in five households said they did not think they could raise $3000 in an emergency.

Almost half of respondents ranked the cost of necessities as their biggest worry with 34 per cent putting cash savings on hand as a major concern.

The survey covers the first signs of stabilisation in the Sydney and Melbourne housing markets where prices have stopped falling.

But Mr Oughton said while households were optimistic about the overall property market, the large level of debt being carried by many Australians was front of mind.

"It's evident that despite the latest monetary policy changes, there remains high levels of housing debt worry and actual payment stress among Australians," he said.

Economists are expecting figures from the Australian Bureau of Statistics to confirm slow wages growth with the latest wages price index tipped to show annual growth of 2.3 per cent.

There are also expectations that Thursday's employment report will show a slight increase in the national jobless rate to 5.3 per cent through July.

My God this must be the umpteenth duplicate GetUp! propaganda post by the union propaganda parrot BlackDay.

GetUp! must have put a bomb under him and told him to start squawking real loud.

juliar wrote on Aug 12^th, 2019 at 9:37am:

My God this must be the umpteenth duplicate GetUp! propaganda post by the union propaganda parrot BlackDay. GetUp! must have put a bomb under him and told him to start squawking real loud.

It's certainly got Juliar sqawking.

There is certainly evidence that unemployment is rising and that consumer spending is falling.

Immigration is still the only thing that keeps Australia out of recession. However, that is a double-edged sword in case there is a downturn because immigrants will be the first to get the chop.

juliar wrote on Aug 12^th, 2019 at 9:37am:

My God this must be the umpteenth duplicate GetUp! propaganda post by the union propaganda parrot BlackDay. GetUp! must have put a bomb under him and told him to start squawking real loud.

We know the Libs have certainly put a bomb under you.

Laugh till you cry wrote on Aug 12^th, 2019 at 9:43am:

There is certainly evidence that unemployment is rising and that consumer spending is falling.

This is why the RBA is cutting interest rates to record low levels and will cut to 0.5% or lower in the next 12 months. It wouldn't be doing this if the economy was doing well.


Laugh till you cry wrote on Aug 12^th, 2019 at 9:43am:

Immigration is still the only thing that keeps Australia out of recession. However, that is a double-edged sword in case there is a downturn because immigrants will be the first to get the chop.

Once foreign workers start to leave the country, they would take their spending with them and this will aggravate the downturn. Either that, or Australia's going to have a bigger problem with illegal immigrants than it already has.

If there's a recession on Scummo's watch, it will be a bad one.

Geez I have stirred up the weird LarfTillUFart and cranky Bammy.

They become irate when presented with FACTS.

juliar wrote on Aug 12^th, 2019 at 10:09am:

Geez I have stirred up the weird LarfTillUFart and cranky Bammy. They become irate when presented with FACTS.

Personal attacks are against the rules of the forum. Are you trolling for a ban?

Bam wrote on Aug 12^th, 2019 at 4:33pm:

juliar wrote on Aug 12th, 2019 at 10:09am: Geez I have stirred up the weird LarfTillUFart and cranky Bammy. They become irate when presented with FACTS. Personal attacks are against the rules of the forum. Are you trolling for a ban?

It's allowable when Coalition supporters do it.  Moderators are also Coalition supporters from looks of things.

Forgot to mention - it's called channeling in the inner Bishop.

Plenty of role modelling on how to moderate discussion across political spectrum.

I don't bother as much about this forum now.  Pointless.

https://www.youtube.com/watch?v=cZTWX3f4eIo

https://www.youtube.com/watch?v=gXR6s2NFpCo

https://www.youtube.com/watch?v=0J1sjXYKnyg

The union propaganda parrot Blackday's squawking multi duplicate GetUp! post seems to have gone down the drain.

"We have a strong economy" - Morrison

Bias_2012 wrote on Aug 12^th, 2019 at 7:24pm:

"We have a strong economy" - Morrison

Nek minnit ... RBA slashes interest rates to stimulate the economy.

whiteknight wrote on Aug 12^th, 2019 at 5:52am:

Households feel pinch on jobs and wage concerns   :( August 11, 2019 The Age Stagnant wages and growing concerns about the state of the jobs market is now weighing on the financial comfort of Australians with a new survey revealing hundreds of thousands of households barely holding their finances together. Ahead of key wage and employment figures, the ME Bank six-monthly survey of financial comfort suggests the long period of slow income growth is leaving many people struggling to cover day-to-day bills.   :( Despite the federal government's tax cuts and falls in official interest rates, the survey found a drop in financial comfort for most Australians since February. ME's six monthly survey of financial comfort shows more Australians feeling the pinch from low wage growth and growing concern about the jobs market. Comfort among working Australians dropped the sharpest with full and part-time workers all registering sizeable declines. ME consulting economist Jeff Oughton said just a third of households reported an increase in annual income over the past year. The number of households getting more pay actually fell through 2018-19. Combined with worries about the jobs market there were increasing fears in many households about their financial strength. "It's clear from the latest report that there are increased concerns around job availability and under-employment," he said.   :( "The number of workers who felt it would be difficult to find a new job increased by 16 per cent to over one in two employees which is the highest recorded since late 2016." Reserve Bank governor Philip Lowe has urged state and federal governments to lift wages for public servants, arguing current caps have effectively "cemented" low income growth across the broader economy. The federal government has rejected the calls, saying it is focused on delivering services to ordinary taxpayers and keeping the budget in surplus. Financial comfort did increase for high-income households which covers those with more than $200,000 in income a year or who hold more than $1 million in their superannuation. About 40 per cent of surveyed households spend all their monthly income. One in five households said they did not think they could raise $3000 in an emergency. Almost half of respondents ranked the cost of necessities as their biggest worry with 34 per cent putting cash savings on hand as a major concern. The survey covers the first signs of stabilisation in the Sydney and Melbourne housing markets where prices have stopped falling. But Mr Oughton said while households were optimistic about the overall property market, the large level of debt being carried by many Australians was front of mind. "It's evident that despite the latest monetary policy changes, there remains high levels of housing debt worry and actual payment stress among Australians," he said. Economists are expecting figures from the Australian Bureau of Statistics to confirm slow wages growth with the latest wages price index tipped to show annual growth of 2.3 per cent. There are also expectations that Thursday's employment report will show a slight increase in the national jobless rate to 5.3 per cent through July.

I agree with that report

The building industry downturn has not yet been reflected in the economy.

https://www.businessinsider.com.au/australia-property-downturn-construction-jobs-2019-5#ofcdiVPP1S3dJi6X.99


Quote:

Australia's construction downturn is getting worse The downturn in Australia’s construction sector is getting worse. According to the Ai Group’s Performance of Construction Index, activity levels continue to weaken while margin pressures are intensifying. Staffing levels were cut at the fastest pace in nearly six years. The construction sector is the third-largest employer in Australia, employing 9% of all workers. New orders continued to dry up, pointing to the likelihood that conditions won’t improve for the foreseeable future. The Ai Group says “there are now strong signs that adverse conditions in the broader construction industry are flowing through to sections of the services and manufacturing sectors”. The downturn in Australia’s construction sector is getting worse with activity levels and new orders declining at a faster pace in April, while margin pressures intensified. Employment also fell the fastest pace in years, an ominous result given the construction sector is the third-largest employer in Australia, behind healthcare and retail. The Australian Industry Group’s (Ai Group) Performance of Construction Index (PCI) slumped to 42.6 in seasonally adjusted terms, down 3.0 points on the level reported in March. It was the equal-lowest reading since June 2013. The PCI measures changes in activity levels across Australia’s construction sector from one month to the next. Anything above 50 signals that activity levels are improving while a reading below suggests they’re deteriorating. The distance away from 50 indicates how quickly activity levels are expanding or contracting. So at 42.6 points, the April result suggests conditions across the sector deteriorated at the fastest pace in years. image: https://edge.alluremedia.com.au/uploads/businessinsider/2019/05/Australia-PCI-April-2019-chart.jpg “Despite growth in engineering construction, overall levels of activity in April were adversely affected by continued declines in housing activity, commercial construction and apartment building work,” the Ai Group said in a statement. Activity levels for housing and apartment construction firms remained bleak with conditions continuing to weaken at a substantial rate. For apartment construction, activity levels declined for a 13th consecutive month while those for home builders fell for a ninth straight month, mirroring continued weakness in other residential construction indicators such as building approvals and new home sales. “Residential building respondents cited reduced customer enquiries as well as the negative influences of tighter lending conditions, falling prices and generally weak home buyer sentiment,” the Ai Group said. “Reports from respondents also linked soft overall demand conditions to concerns about the slowing economy and uncertainty in the lead-up to the Federal election which had led to some hesitation among clients.” Elsewhere, commercial construction activity also weakened for a ninth consecutive month, albeit not as a pace as severe as the downturn experienced for the residential sector. Activity levels for engineering firms managed to buck the broader trend, improving modestly from the levels reported in March. “This improvement was linked to stronger workflows as new projects commenced,” the Ai Group said. “A sizeable pipeline of public funded infrastructure projects and new project additions by governments, points to a more distinct recovery in activity ahead.” Pointing to the likelihood that activity levels will remain weak across the construction sector in the months ahead, new orders continued to contract sharply for home, apartment and commercial construction firms. New work for engineering firms was stable from a month earlier. Fitting with the broader themes in the April survey, the individual activity sub-indexes were a horror show. Input costs continued to lift at a rapid pace while final selling prices declined at a faster pace, indicating an intensification in margin pressures for construction firms. “Survey respondents continued to indicate on-going pressures from a highly competitive tendering environment and tight margins,” the Ai Group said. “Cost pressures in the delivery of construction projects remains a concern for many constructors due to elevated energy costs and relatively high prices for commodities and imported construction materials. “Respondents also expressed concerns about the slowdown in growth in the wider economy.” With new work drying up and cost pressures acute, firms cut staffing levels at the fastest pace in nearly six years during the month. “It indicates that businesses outside of infrastructure construction are responding to the on-going weakness of overall demand conditions by exerting greater caution in their labour recruitment,” the Ai Group said. The construction sector directly employs over 1.1 million Australians, or 9% of all workers. The substantial pace of job shedding indicated by firms is yet another concerning signal on the broader pace of employment growth in the months ahead. ...

Property developer bankruptcies are a sign of weakness in the building industry. The article also says the weakness is reflecting in other sectors of the economy.

https://www.abc.net.au/news/2019-08-01/construction-industry-cracks-showing-as-major-developer-falls/11374464


Quote:

Construction industry cracks showing as Ralan Group goes under By business editor Ian Verrender Posted 1 Aug 2019, 11:32am RELATED STORY: More than 3,000 units in limbo as one of Australia's major property developers collapses The cracks first appeared in the buildings. Now they have begun to spread across the industry. The collapse of two high-rise apartment developers — the Sydney-based Ralan Group and Melbourne's Stellar Group — within the past month has ignited the property industry's worst fears: that large numbers of would-be buyers either are unable or unwilling to settle on pre-sold apartments. Lured by the prospect of easy profits in a booming market, property investors snapped up units off the plan, armed with a small deposit and in many cases a non-binding assurance from a financier, usually a bank. But the property downturn in the past two years has seen sharp falls in apartment prices in Brisbane, Sydney and Melbourne, adding to the already depressed markets in Perth and Darwin. Off-the-plan buyers in a sticky situation That's put many would-be investors under water, left holding agreements to pay boomtime prices, usually well above the current market rate. And that's when things get sticky. That agreement with the bank was never a guarantee. It wasn't even a promise. While the bank may lend money, often it will only be for a reduced amount, leaving the buyer scrambling to raise the extra cash to buy an overvalued apartment. Off-the-plan apartment risks There are many risks to buying a home off-the-plan, and many purchasers are not aware of them all. As an off-the-plan buyer, however, there is a legal obligation to take the unit. Either they cough up the full, final payment or face default, which results in losing the deposit and being potentially exposed to legal action to recover the full amount. The situation has been deteriorating for the past year. Banks have been under pressure to impose greater scrutiny on borrowers' finances and eradicate the irresponsible lending practices that helped fuel the property bubble. Property research group CoreLogic reported in April that about one in five units bought off-the-plan were now valued at 10 per cent less than the agreed purchase price. That was way above levels of a year earlier. Not surprisingly, there were far more under water for less than 10 per cent. About half of all units up for settlement came up short of the agreed contract price. Economic nightmare scenario For smaller, privately owned developers, like Ralan, this creates the kind of liquidity crisis from which there is no recovery. It is also the scenario the Reserve Bank has been praying would not play out. Australia's house of cards Australia's housing downturn appears to be over … for now. But huge household debts leave the nation vulnerable to a shock. Earlier this week, residential approvals — particularly for new units — slumped to a six-year low, 26 per cent below the levels in the same period last year. Even without the sudden shock of collapses such as Ralan — with a pipeline of 3,000 units under construction — that kind of industry downturn will result in large-scale layoffs. According to investment bank UBS, the recent slide in construction job advertisements is consistent with its forecasts for about 100,000 job losses before the end of this year. Economists at investment bank UBS expect construction jobs to fall by around 100,000 from the peak. PHOTO: Economists at investment bank UBS expect construction jobs to fall by around 100,000 from the peak. (Supplied: UBS) Jobs at risk as house prices fall Job advertisement data indicates the banking royal commission and house price falls may have already curtailed career opportunities in finance, construction and retail. After pledging to drop the unemployment rate to 4.5 per cent, it's little wonder Reserve Bank governor Philip Lowe has been urging the Commonwealth and state governments to fire up infrastructure spending. Then, there's the ripple effect across the building supply industry. Share prices across the sector tumbled on Wednesday after cement group Adelaide Brighton downgraded its earnings for the second time in three months and canned its dividend. On Wednesday, its shares slumped more than 18 per cent. The slide continued on Thursday, with another 5 per cent drop. Expect those falls to be mirrored by interest rates.

Laugh till you cry wrote on Aug 13^th, 2019 at 12:46am:

Property developer bankruptcies are a sign of weakness in the building industry.

Some property developer bankruptcies are not real bankruptcies. They're examples of phoenixing to escape obligations for debts.

This is why we need a three-strikes law for bankruptcies: anyone who is bankrupt three times or has an executive position in any company that is bankrupt three times (or any combination thereof) is banned for life from having any executive position in any company.