Weekly Payrolls to November 14. Recovery continues in Victoria but appears to be fading elsewhere. Small business payrolls are tanking while teenage payrolls continue to surge.
The Victorian lockdown was lifted on November 8 so it’s not surprising to see a further gain in payrolls led by a strong recovery Victoria.
The gains in Victoria were supported by some smaller states while NSW reported a decline and Qld was flat suggesting there was been a loss of momentum in the larger states.
But what is worrying is the recent decline in payrolls by small businesses (those that employ less than 20 workers) which had recovered to pre-COVID levels in September.
Total payrolls lifted 0.1% in the two weeks to November 14 as number of employees on ATO payroll register continued to improve. It was, however, a bit of a bumpy path through those two weeks as payrolls fell –0.5% in the week ended 7 November to then rise 0.6% in the week ended November 14.
We have been watching the recovery in Victoria prior to the reopening on November 8 so it is not surprising given that while this released only covers one week of the reopening, Victorian payrolls lifted 1.1% in the last four weeks as momentum continued to improve: Payrolls fell –0.3% in the week ended November 7 then bumped up a solid 0.8% in the week ended November 14. Payrolls in Victoria are down –5.4% since March 14 so still have a long way to go not just to recovery their losses but to catch up to the recovery in the other states.
NSW has slipped in the last four weeks to be down –0.4% but it has been a bumping trend falling –0.7% in the week ended November 7 then lifting 0.4% in the week ended November 14. Since March 14 NSW payrolls are down –2.8%.
For the other states, Qld was flat in the last four weeks but again a bumpy rise with a –0.6% fall in the week ended November 7 and a 0.8% gain in the week ended November 14. WA has eked out a modest 0.2% gain in four weeks while SA was flat. Since March 14 payrolls are down –1.8% in Qld, –0.8% in SA and –0.4% in WA. Outside of Victoria the state that still lagging the national recovery is Tasmania where payrolls are down –4.1% since March 14.
With the lockdowns, small business payrolls (those that employ less than 20 people) fell 11.3%. Those that employ 20 to 199 fell 12.3% while those that employ 200 or more fell 5.3%. But with the introduction of the Job Keeper small business payrolls surged so that by mid-September they were back to pre-COVID levels. By contrast payrolls for firms employing 200 or more were still 2.3% lower while those employing 20 to 199 were 5.4% lower.
Since then there has been a significant contrast – small business payrolls are now 6% down from September and their March starting point while large (200 and more) firms are as good as back to March while mid-sized firms (20-199) have improved a bit to be down 5% on March. Job Keeper arrangements where changed on August 7.
For the states, while the April lockdowns had a similar impact on the states small business payrolls, all falling around 11%, the recovery from there was quite different for each. WA surged ahead with payrolls peaking at 3.2% above March levels in mid-September, Qld was 2.3% higher while NSW was 1% higher. By contrast Victoria peaked in early July to be around 2% down on the March level and with the new round of shutdown, Victorian small business payrolls went into a trend decline to be 9% lower than March by November. But the other states small business payrolls have been hit as well with NSW now down 8% from March, Qld is down 4% and even WA is now 2% lower.
In regard to small business, there is a worrying sign that they are being left behind in the recovery and may be a source of weakness and uncertainty as we head into 2021.
By age, the gains in payrolls are still the strongest for under 20s, up 6.7% in the last four weeks, while it is the weakest for the over 70s where they are down –1.0% in four weeks and –0.2% for the 30s to 39s. Since March 14 teenage payrolls are up 16.5% while over 70s payrolls are down –13.1%.
As a potential guide to employment we have been taking the average of payrolls in first two weeks of each month compared to the first two weeks a month earlier. This measure lifted 0.1% in November: contrast with our current forecast for a +70k rise in employment which is equivalent to a 1.1% rise in original terms.
In October, payrolls fell –0.8% in original terms but employment in the Labour Force Survey rose 1.4% in original terms. We are still working on how we can reconcile payrolls to the labour force survey and until we do, we not going to put too much weight on the payrolls estimate as a guide to monthly employment outcomes.
The whole point of stimulus is to blow the lid off the labour market. This is Depressionberg Unstimulus at work.
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.
