Dissecting job losses

The ABS published employment data by industry which gave an insightful look into how Coronavirus (CV) restrictions have affected the economy.

Chart 1 shows unsurprisingly that tourism/hospitality related industries have been badly hurt over the last few months, with over 300,000 job losses in the accommodation and food services industry. However, the job losses have been relatively widespread, affecting blue collar and white collar industries alike. A potential surprise here has been significant job losses in the health and education industries.

Chart 1: Change in employment by industry (levels)


Chart 2 accounts for the different size of industries and shows the % change in employment over the last three months. Arts and recreational services and accommodation and foods services have seen scary losses of around 1-in-3 workers. Yet there have been a further four industries with more than 1-in-10 workers let go.

Chart 2: Change in employment by industry (%)


The bad news is there are more job losses to follow May’s numbers. Qantas recently announced 6,000 jobs to go while Deloitte announced 700 job losses, the largest of the “Big 4” so far. Worringly for the future, the opening up of the economy has seemed to have stalled, particularly in Victoria.


Dissecting job losses

More economic fallout data

The ABS has been on a tear with the data releases lately and I’ll touch on a few of interest amid the 2020-defining Coronavirus.


Preliminary numbers for May indicate a large rebound which is a positive for some retailers which have been beaten down. However, it varies widely on the type of retailer in question, with some (think Bunnings – a household goods retailer) actually seeing higher trade – which they flagged in an announcement to the ASX. Hard hit have been clothing, footwear and personal accessory retailers and also cafes, restaurants and takeaway (no surprises there).

Chart: 1/3 month change in retail turnover by category


By State, retail trade also tells an interesting story about the incidence of the CV related restrictions. Victoria looks to be hardest hit, with New South Wales and Tassie also copping a fair amount of pain. That is not surprising given the reliance on international education, tourism and hospitality in these jurisdictions. The NT has come through relatively unscathed – one positive to being on the floor…

Chart: Retail sales by state (1/3 month change)



May’s employment numbers were pretty bad. Employment fell by 228,000 jobs, the number of unemployed jumped by 86,000 and the unemployment rate from 6.4 to 7.1%. More worryingly it would have jumped by a lot more had there not been a significant fall in the participation rate, in short it seems many people have ‘given up’ looking for work (at least currently), which flatters the unemployment rate.

Chart: Number of persons not in the labour force (NILF)


Job losses have hit females slightly harder than males (7.4% decline in jobs for women over the last 3 months compared to 5.6% for men). This largely reflects the industry distribution of female vs male employment.

House prices

Softening but no sign of crash. At the national level, house prices increased by 1.6% over the March quarter, with annual growth of 7.4%. Granted this misses most of the CV impact, and we can expect to see a much softer or even negative June quarter based on private sector data. However, there is still no sign of a major crash. Moreover, interest rate cuts and fiscal stimulus directed towards housing (whether at state or federal level) will soften the blow. Yet, slower population growth and higher unemployment are genuine negatives for the market.

Chart: Year-to dwelling price growth by city


Until next time.

More economic fallout data

The hated rally continues

During the recent sell-off I witnessed the admonishment of those taking a 1/3 off sale to buy stocks. Haughty remarks mocking those quoting well-known Buffett stocks to buy stocks, many of which had fallen by 50,60,70,80%.

Now as the market continues to rally and economies re-open amid unprecedented (cringe) stimulus, many of those lows are looking far, far away. In loose terms, the ASX fell from 7,200 to 4,800 and has now retraced a full half of the fall (6,000).

To use an analogy of a mentor of mine, Nathan Birch (follow him on social media if you like or his company, Binvested), it was ‘rings, wallets and watches time’. Nathan’s analogy was that in the event of a fire in the building, most drop their valuables and rush for the exits. Nathan meanwhile, expecting the fire service to arrive (economic stimulus), snatches up the rings, wallets and jewelry and hides in a stairwell.

Sure enough, the fire service arrives and puts out the fire. Those who panicked rush into the building to find their valuables, only to find a smiling man offering them back at well over the price they left them behind at!

It’s a good analogy and indicates the various mechanisms at play in the market and inter-linkages between mass psychology, the media and financial institutions.


The hated rally continues