The Victorian lockdown was lifted on November 8 so it’s not surprising that the gains in payrolls was led by a strong recovery Victoria. WA still stands out as the strongest state why NSW is starting to lift again.
The lift in Victoria was supported by robust gains in NSW and Queensland.
In the month (4 weeks) to November 28 payrolls gained 0.7% to now be down –2.0% since March 14 (before the start of the COVID lockdowns).
Total payrolls lifted 0.4% in the two weeks to November 28 as number of employees on ATO payroll register continued to improve. Momentum seems to be improving with a flat print for the week ended 21 November then a 0.4% rise in the week ended November 28.
The recovery has been the strongest for teenagers who have seen their wages grow faster than jobs. The over 70s are still being hit hard by the COVID shock and their wages are still down more than jobs since March.
Females have seen a stronger recovery in jobs than males while their wages have been more resilient than jobs.
Small businesses payrolls are declining again, even in WA, while large firms have seen their payrolls return to close to pre-COVID levels. It is interesting to contrast this with the gain in the self employed in the Labour Force Survey.
Accommodation & food services and arts & recreation are recovering while weakness has appeared in construction payrolls.
For the last few months payrolls have not given us a good guide to the strength of employment in the Labour Force Survey. Nevertheless, the strength of the recovery in Victoria, plus ongoing recovery elsewhere, does mean we should see a robust print for November. Our forecast is for +75k.
The recovery in Victoria started prior to the state reopening on November 8 and this positive momentum is continuing. Victorian payrolls lifted 1.3% in the last four weeks with a 0.1% gain in the week ended November 21 then a further 0.4% lift in the week ended November 28. Payrolls in Victoria are down –4.3% since March 14 so still have some way to recover the COVID losses and catch the recovery in the other states.
NSW continued to improve in the last four weeks rising 0.5% and it too had a firming trend with payrolls lifting 0.1% in the week ended November 21 then lifting 0.5% in the week ended November 28. Since March 14 NSW payrolls are down –1.7%.
WA continues to outperform lifting 0.9% in the last four weeks to now be 0.7% higher than pre-COVID levels. WA is the first state to recovery its COVID losses and then add to it. The next closest is South Australia which is still down –0.7 from March 14. The recovery in Queensland has been a bit more choppy with payrolls lifting 0.3% in the last four weeks but they fell –0.4% in the week ended the November 21 to then lift 0.4% in the week ended November 28.
We have also been watching the decline in small business employment. While payrolls for firms employing more than 200 people is only 0.3% below the pre-COVID level while firms employment between 20 and 199 are down 4% while payrolls for firms employing less than 20 are 3.7% lower. But the trend for the smallest firms is worrying – having outpaced the mid-sized firms in the early stages of recovery SMEs payrolls have contracted –2.0% in the last four weeks while payrolls for mid-sized firms have lifted 0.8% and large firms have gained 1.9%.
We can also see the very different results by states for SMEs. While most states did see a strong recovery in SME payrolls lifting them to be higher than pre-COVID levels by September, this changed through October and most are now reporting levels lower than. WA stands out with the strongest recovery and is still holding SME payrolls at March levels. Victoria did not make it back to March levels (peak was –1.8%) SME payrolls declining since July. However, they are not that much different to NSW when compared to March levels; –6.1% vs. –4.7% highlighted the strength of the recent correction in NSW. Qld is down just –1.8% from March.
It is interesting to contrast the decline in small business payrolls against the rise in employment by owner managers without employees (self employed). Compared to total employed and employees only, the self employed fell more sharply and were slower to recover from the COVID shutdowns. However, from late September the self-employed have leapt ahead to be around 1% higher than they were in March while employees/employed are close to –2% lower (using seasonally adjusted data). We don’t have enough data to seasonally adjust weekly payrolls but we can compare original self-employed payrolls data to the original data in the Labour Force Survey. This time the contraction in SME payrolls was sharper and deeper than the contraction in self employed (–9.3% vs. –6.2%) followed by quicker recovery by the SME payrolls (by July SME payrolls was down just –0.8% compared to March while the number self-employed was still down –4.4%). By October the situation reversed with the number self-employed being almost 2% higher than March while SME payrolls are –1.4% lower; the situation deteriorated further through November with SME payrolls now –2.6% lower than March (we will get the November Labour Force update thus Thursday). It is hard to get a clear picture on flows associated with the two data sets, or even determine if there is a relationship between the two but it does appear to be anecdotal evidence of small business struggling and closing up shop while there has been a meaningful flow into the “gig economy” as self-employed.
The industry mix has also changed as the recovery has progressed. At the start of the COVID shutdowns accommodation & food services were the hardest hit but arts & recreation was not far behind. Now we find that compared to March levels accommodation & food services is down –12.2%, information, media & telecoms have weakened further to be down –10.7, construction payrolls are –6.7% lower while arts & recreation are down –6.7%, just a touch more than transport at –6.4%. The industries that are now stronger than they were in March includes utilities (7.7%), financial services & insurance (4.7%) and public administration & safety (3.5%). In the last four weeks payrolls have grown 7.3% in art & recreation, 7.0% for finance & insurance services, 5.5% in utilities and 4.3% in education & training. Even retail payrolls have improved lifting 3.0% in four weeks while manufacturing has gained 2.6%. Payrolls contracted in the last four weeks in other services (–1.58%), construction (–1.2%) and public administration & safety (–0.9%).
By age in the last four weeks the strongest gains were again by teenagers (under 20s +8.3%) while the softest were 60s to 69s (flat). Compared to March payrolls for teenagers are now up 21%, all other age groups are down with the smallest being –1.6% for 40 to 49 and the largest being –11.7% for the over 70s.
In the month females continued to outpace males (+0.8% vs +0.1%) with females now only –2.2% below pre–COVID levels while males are –3.8% lower.
It is also worthwhile to contrast the situation with wages compared to jobs as reported in the weekly payrolls. Since March, jobs are down –2.0% but wages are down –2.6%. It is a bit more extreme for males where jobs have fallen –3.8% since March and wages are down –4.9% but it is the reverse for females where jobs are –2.2% but female wages are down just –0.1%. In April and May it did appear that females received more of a benefit of JobKeeper lifting part-time wages but in the last four weeks female wages grew 2.3% while employment lifted 0.8% suggesting the composition of the recovery is favouring higher wage jobs. For males in the last four weeks wages have grown 1.3% while jobs lifted just 0.1%.
For teenagers the recovery in wages has been even more stunning. While employment is up 21% from March wages are up 51.3%, quite a startingly outcome. Even in the last four weeks teenage employment has lifted 8.3% while wages have surged 12.2%. Contrast that with the over 70s where jobs are –11.% down on March, wages are down –12.3%. Even in the last four weeks wages for over 70s is down –1.4% compared to a 0.2% gain in employment. The over 70s was the only group to report wages growing more slowly than jobs through the last four weeks.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
