Weak Growth, Tight Job Markets Are a Global Phenomenon
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    HOUSE MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $1,599,192 (-0.51%)       Melbourne $986,501 (-0.24%)       Brisbane $938,846 (+0.04%)       Adelaide $864,470 (+0.79%)       Perth $822,991 (-0.13%)       Hobart $755,620 (-0.26%)       Darwin $665,693 (-0.13%)       Canberra $994,740 (+0.67%)       National $1,027,820 (-0.13%)                UNIT MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $746,448 (+0.19%)       Melbourne $495,247 (+0.53%)       Brisbane $534,081 (+1.16%)       Adelaide $409,697 (-2.19%)       Perth $437,258 (+0.97%)       Hobart $531,961 (+0.68%)       Darwin $367,399 (0%)       Canberra $499,766 (0%)       National $525,746 (+0.31%)                HOUSES FOR SALE AND WEEKLY CHANGE     Sydney 10,586 (+169)       Melbourne 15,093 (+456)       Brisbane 7,795 (+246)       Adelaide 2,488 (+77)       Perth 6,274 (+65)       Hobart 1,315 (+13)       Darwin 255 (+4)       Canberra 1,037 (+17)       National 44,843 (+1,047)                UNITS FOR SALE AND WEEKLY CHANGE     Sydney 8,675 (+47)       Melbourne 7,961 (+171)       Brisbane 1,636 (+24)       Adelaide 462 (+20)       Perth 1,749 (+2)       Hobart 206 (+4)       Darwin 384 (+2)       Canberra 914 (+19)       National 21,987 (+289)                HOUSE MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $770 (-$10)       Melbourne $590 (-$5)       Brisbane $620 ($0)       Adelaide $595 (-$5)       Perth $650 ($0)       Hobart $550 ($0)       Darwin $700 ($0)       Canberra $700 ($0)       National $654 (-$3)                UNIT MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $730 (+$10)       Melbourne $580 ($0)       Brisbane $620 ($0)       Adelaide $470 ($0)       Perth $600 ($0)       Hobart $460 (-$10)       Darwin $550 ($0)       Canberra $560 (-$5)       National $583 (+$1)                HOUSES FOR RENT AND WEEKLY CHANGE     Sydney 5,253 (-65)       Melbourne 5,429 (+1)       Brisbane 3,933 (-4)       Adelaide 1,178 (+17)       Perth 1,685 ($0)       Hobart 393 (+25)       Darwin 144 (+6)       Canberra 575 (-22)       National 18,590 (-42)                UNITS FOR RENT AND WEEKLY CHANGE     Sydney 6,894 (-176)       Melbourne 4,572 (-79)       Brisbane 1,991 (+1)       Adelaide 377 (+6)       Perth 590 (+3)       Hobart 152 (+6)       Darwin 266 (+10)       Canberra 525 (+8)       National 15,367 (-221)                HOUSE ANNUAL GROSS YIELDS AND TREND         Sydney 2.50% (↓)       Melbourne 3.11% (↓)       Brisbane 3.43% (↓)       Adelaide 3.58% (↓)     Perth 4.11% (↑)      Hobart 3.78% (↑)      Darwin 5.47% (↑)        Canberra 3.66% (↓)       National 3.31% (↓)            UNIT ANNUAL GROSS YIELDS AND TREND       Sydney 5.09% (↑)        Melbourne 6.09% (↓)       Brisbane 6.04% (↓)     Adelaide 5.97% (↑)        Perth 7.14% (↓)       Hobart 4.50% (↓)       Darwin 7.78% (↓)       Canberra 5.83% (↓)       National 5.76% (↓)            HOUSE RENTAL VACANCY RATES AND TREND       Sydney 0.7% (↑)      Melbourne 0.8% (↑)      Brisbane 0.4% (↑)      Adelaide 0.4% (↑)      Perth 1.2% (↑)      Hobart 0.6% (↑)      Darwin 1.1% (↑)      Canberra 0.7% (↑)      National 0.7% (↑)             UNIT RENTAL VACANCY RATES AND TREND       Sydney 0.9% (↑)      Melbourne 1.4% (↑)      Brisbane 0.7% (↑)      Adelaide 0.3% (↑)      Perth 0.4% (↑)      Hobart 1.5% (↑)      Darwin 0.8% (↑)      Canberra 1.3% (↑)        National 0.9% (↓)            AVERAGE DAYS TO SELL HOUSES AND TREND         Sydney 28.7 (↓)       Melbourne 30.7 (↓)       Brisbane 31.0 (↓)       Adelaide 25.4 (↓)       Perth 34.0 (↓)       Hobart 34.8 (↓)       Darwin 35.1 (↓)       Canberra 28.5 (↓)       National 31.0 (↓)            AVERAGE DAYS TO SELL UNITS AND TREND         Sydney 25.8 (↓)       Melbourne 30.2 (↓)       Brisbane 27.6 (↓)       Adelaide 21.8 (↓)       Perth 37.8 (↓)       Hobart 25.2 (↓)       Darwin 24.8 (↓)       Canberra 41.1 (↓)       National 29.3 (↓)           
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Weak Growth, Tight Job Markets Are a Global Phenomenon

Economists cite ageing populations and relatively low immigration as factors that became more pronounced during the pandemic

By TOM FAIRLESS
Mon, Aug 8, 2022 11:40amGrey Clock 4 min

From Berlin to Tokyo to Sydney,  economic growth is slowing or turning negative across advanced economies, yet labour markets remain historically tight.

Talk of a “jobful recession” has centred on the U.S., where payrolls grew by more than half a million in July and the unemployment rate declined to its prepandemic low of 3.5% even as economic output contracted in the three months through June. The same conundrum crops up around the world.

In Germany, growth stalled in the three months through June, and the country faces imminent recession as its energy supplies dry up. But the unemployment rate remains close to a 40-year low, and almost half of companies say worker shortages are hampering production. The jobless rate in the wider eurozone is at a record low. New Zealand’s economy shrank in the first three months of the year, but its jobless rate, at 3.3%, has stayed close to a multidecade low.

It is the opposite of the “jobless recovery” diagnosed after the 2008 global financial crisis, when economic growth in the U.S. and parts of Europe picked up but unemployment remained painfully high for years.

The current dichotomy might not last. Central banks are raising interest rates to rein in high inflation, which could in time undercut labour demand. The Bank of England on Thursday raised its policy rate by 0.5 percentage point, to 1.75%, and forecast a lengthy recession that would likely boost unemployment to 5.5% from its current 3.8%, which matches the prepandemic low.

Still, subdued growth may coincide with ultralow unemployment more often in coming years, judging by the country that experienced it first. For three decades Japanese growth has been low or negative, averaging 0.8%, but its unemployment rate has never been more than 5.5% and has ratcheted steadily lower since 2010 to stand at 2.6% now—close to its prepandemic low of 2.2%.

The reason, economists say, is a tight labour market because of an aging population and relatively few immigrants, features that have become more pronounced in other advanced economies during the pandemic.

In the years before the pandemic, Japan took steps to make it easier for mothers of small children to work, keep older workers on the job, and loosen restrictions on migrant labour, such as allowing foreign students to work 28 hours a week. But just as those measures were making an impact, the pandemic hit and Japan closed its borders to most new workers.

A shortage of workers forced Masaya Konno, a business owner in Tokyo, to temporarily close his Japanese-style pub last month. Even after he increased pay to ¥1,300  an hour, which is ¥100 to ¥200 above the wages prevailing a year ago, he still can’t find enough workers. “We couldn’t overcome a labour shortage,” Mr. Konno said.

Unemployment and growth usually show a predictable relationship known as Okun’s Law, named for the Yale University economist Arthur Melvin Okun, who first proposed it in 1962. In the U.S., Okun’s law predicts that a 1% decline in output below its potential causes an increase in unemployment of half a percentage point.

However, that relationship can shift depending on factors such as workers‘ output per hour and labour-force growth, said Laurence Ball, an economics professor at Johns Hopkins University. If there are fewer workers and job seekers, the labour market can remain tight even if growth is weak.

Since February 2020, the U.S. labour force has shrunk by about half a million. In Germany, the labour force shrank by about 350,000 over the same period, while in the U.K. it shrank by about 550,000.

Migration has slowed across advanced economies as governments restricted entry to keep out Covid-19 and its variants. In New Zealand, the number of people arriving with work visas shrank from about 240,000 in the year through June 2019, to just 5,000 in the year through June 2021, government data show. In the U.S., the slowdown in immigration began in 2017, when the Trump administration adopted a range of policies to curb both illegal and legal immigrants. The annual net inflow has fallen from more than one million in 2015-16 to about a quarter of a million in 2020-21, according to the U.S. Census Bureau.

Meanwhile, older workers dropped out of the workforce, in some cases to avoid exposure to Covid-19. Some younger adults quit work to care for children or other family members.

There are signs that as vaccines cut the risk of severe illness or death from Covid, workers have returned to the labour force and migration has resumed. In New Zealand, the number of people arriving with work visas surged to almost 5,000 this past June. That suggests unemployment may start to respond more to changes in economic output.

Other forces might be more durable, however. Older people aren‘t yet returning to work in the U.S.: The labour-force participation rate of workers aged 65 or older has fallen to about 23% from 26% in early 2020. Rapidly aging Germany and Italy are expected to lose millions of workers to retirement over the next decade, which suggests labour shortages will persist.

While sustained low unemployment is generally a boon, Japan’s experience also shows the downsides: It means that the economy isn’t able to quickly direct workers to growth areas, which can limit “creative destruction”—the elimination of obsolete industries so that new industries can grow.

Takahide Kiuchi, an economist at Nomura Research Institute and former Bank of Japan policy board member, said, “Japan’s economy may look more stable with mild inflation. But the flip side of a stable economy is the negative impact of slow changes in the industrial structure.”

Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: August 7, 2022.



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Why Prices of the World’s Most Expensive Handbags Keep Rising

Designers are charging more for their most recognisable bags to maintain the appearance of exclusivity as the industry balloons

By CAROL RYAN
Tue, Mar 5, 2024 3 min

The price of a basic Hermès Birkin handbag has jumped $1,000. This first-world problem for fashionistas is a sign that luxury brands are playing harder to get with their most sought-after products.

Hermès recently raised the cost of a basic Birkin 25-centimeter handbag in its U.S. stores by 10% to $11,400 before sales tax, according to data from luxury handbag forum PurseBop. Rarer Birkins made with exotic skins such as crocodile have jumped more than 20%. The Paris brand says it only increases prices to offset higher manufacturing costs, but this year’s increase is its largest in at least a decade.

The brand may feel under pressure to defend its reputation as the maker of the world’s most expensive handbags. The “Birkin premium”—the price difference between the Hermès bag and its closest competitor , the Chanel Classic Flap in medium—shrank from 70% in 2019 to 2% last year, according to PurseBop founder Monika Arora. Privately owned Chanel has jacked up the price of its most popular handbag by 75% since before the pandemic.

Eye-watering price increases on luxury brands’ benchmark products are a wider trend. Prada ’s Galleria bag will set shoppers back a cool $4,600—85% more than in 2019, according to the Wayback Machine internet archive. Christian Dior ’s Lady Dior bag and the Louis Vuitton Neverfull are both 45% more expensive, PurseBop data show.

With the U.S. consumer-price index up a fifth since 2019, luxury brands do need to offset higher wage and materials costs. But the inflation-beating increases are also a way to manage the challenge presented by their own success: how to maintain an aura of exclusivity at the same time as strong sales.

Luxury brands have grown enormously in recent years, helped by the Covid-19 lockdowns, when consumers had fewer outlets for spending. LVMH ’s fashion and leather goods division alone has almost doubled in size since 2019, with €42.2 billion in sales last year, equivalent to $45.8 billion at current exchange rates. Gucci, Chanel and Hermès all make more than $10 billion in sales a year. One way to avoid overexposure is to sell fewer items at much higher prices.

Many aspirational shoppers can no longer afford the handbags, but luxury brands can’t risk alienating them altogether. This may explain why labels such as Hermès and Prada have launched makeup lines and Gucci’s owner Kering is pushing deeper into eyewear. These cheaper categories can be a kind of consolation prize. They can also be sold in the tens of millions without saturating the market.

“Cosmetics are invisible—unless you catch someone applying lipstick and see the logo, you can’t tell the brand,” says Luca Solca, luxury analyst at Bernstein.

Most of the luxury industry’s growth in 2024 will come from price increases. Sales are expected to rise by 7% this year, according to Bernstein estimates, even as brands only sell 1% to 2% more stuff.

Limiting volume growth this way only works if a brand is so popular that shoppers won’t balk at climbing prices and defect to another label. Some companies may have pushed prices beyond what consumers think they are worth. Sales of Prada’s handbags rose a meagre 1% in its last quarter and the group’s cheaper sister label Miu Miu is growing faster.

Ramping up prices can invite unflattering comparisons. At more than $2,000, Burberry ’s small Lola bag is around 40% more expensive today than it was a few years ago. Luxury shoppers may decide that tried and tested styles such as Louis Vuitton’s Neverfull bag, which is now a little cheaper than the Burberry bag, are a better buy—especially as Louis Vuitton bags hold their value better in the resale market.

Aggressive price increases can also drive shoppers to secondhand websites. If a barely used Prada Galleria bag in excellent condition can be picked up for $1,500 on luxury resale website The Real Real, it is less appealing to pay three times that amount for the bag brand new.

The strategy won’t help everyone, but for the best luxury brands, stretching the price spectrum can keep the risks of growth in check.

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