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July 23 2021

1. Where oh where is labour…

A record high share of Australian firms in Q2 reported that finding workers was a significant constraint on their ability to increase output. Putting more pressure on wages, which is being ratified in our recent company and industry calls. Also evidenced in the US hospitality industry as their economy reopens.

US average hourly wage (hotel and food service employees)

2. Inflation watch…

Check your toiletries, cleaning products and salad dressing prices! Unilever saw their June half underlying operating margin fall 100bp to 18.8% due to accelerating cost inflation. And has warned prices of its products will go up to accommodate raw material costs not seen for a decade. Crude, palm and soya bean oil, as well as transport and packaging costs, were called out as impacting profitability. See a reminder of the skyrocketing shipping rates below.

Source: FT

Source: Bell Potter

3. Spending power…

It is impressive to see the breakout in real household disposable income per capita, after a decade of stagnation. Seems our spending power is unprecedented, as we await the increased Unilever prices to come through!