• Record lift in credit card use. The number of purchases and cash out transactions made on credit cards lifted by 13 per cent in November – the biggest increase for a November month.
• Credit card balances are growing at the slowest annual pace in a year. The average credit card balance in November was up just 2.6 per cent on a year ago. The average balance recorded the usual seasonal lift in the month, up $35.90 to $3,280.70.
• Credit card cash advances rose sharply. While it appears an aberration, the number of credit card cash advances lifted 9.6 per cent in November. If the result isn’t reversed next month this may indicate that the recent rate hike has put consumer finances under stress.
• A surprise improvement in tourism numbers. Tourism arrivals have risen for eight months in trend terms while departures are now falling. Given the high level of the dollar, the results are encouraging.

What does it all mean?

• Consumers appeared to take out their credit cards and spend with gusto in November. Credit card use usually does start to lift each November, peaks in December and then falls sharply in January. But the lift in credit card use this November was the biggest ever recorded. That may be a worry for retailers. Because if credit card use soared and retail trade only managed to rise 0.3 per cent in the month, then the December sales figures may prove even softer. Consumers were no doubt enticed to spend by massive discounts on offer by retailers.
• The average credit card balance is barely growing at present with consumers much preferring to live within their own means. The average balance is up just 2.6 per cent on a year ago, the slowest annual pace in a year. And once inflation is taken into account, the average credit card balance hasn’t budget over the past year.
• There were some odd movements in consumer cash and credit transactions in November. Purchases made on both credit and debit cards spiked higher while there was also a sharp surge in one of the most expensive forms of finance – taking cash advances on credit cards. We can’t read too much into one month’s numbers as previous large spikes have generally been quickly reversed the next month. But it is worth watching just to ensure that the November rate hike hasn’t created stress on household balance sheets.
• The good news is that tourism arrivals are showing modest signs of recovery despite the high value of the currency. In fact tourist arrivals have been consistently rising in trend terms for eight months while departures actually turned negative in the latest month.
• The Federal Government simply needs to be doing more to lift migrant numbers and thus prevent skill shortages in the economy. In November, net migrant numbers stood at just over 5,000 people – the second lowest result recorded over the past decade. After the floodwaters recede in Queensland, a substantial rebuilding operation will be needed, thus putting pressure on the job market. To meet the demand for workers, the government will clearly need to look overseas or risk forcing wages and prices up.

What do the figures show?

Overseas arrivals/departures

• Net permanent and long-term arrivals to Australia fell to 206,900 people in the year to November, down 33.8 per cent or 105,530 people on a year ago. Departures from Australia rose by 43,320 while arrivals plunged by 62,210.
• The net number of permanent settlers entering Australia (arrivals less departures) stood at 5,020 in November – the lowest monthly total in 11 months and second lowest result in a decade.
• Tourist departures rose by 0.7 per cent in November to 602,100 after falling by 1.3 per cent in October. It was only the second rise in departures in five months.
• Tourist arrivals rose by 1.1 per cent in seasonally adjusted terms in November to 504,800 after falling by 2.1 per cent in October. It was the third rise in arrivals in four months.
• In seasonally adjusted terms the tourism deficit – the gap between departures and arrivals – stood at 97,300 in November, down 1,200 in the month and below the record (34-year history) deficit of 125,900 in June.
• In trend terms, tourism arrivals have risen for the past seven months. Tourism departures fell 0.1 per cent in trend terms in November – the first fall in 18 months.

Credit & debit card activity:

• Figures released from the Reserve Bank show that the average credit card balance recorded its usual seasonal increase in November, lifting by $35.90 to $3,280.70. But the average credit card balance is only up 2.6 per cent on a year earlier – the slowest annual growth in a year. Over the past five months, the average credit card balance has fallen by $3.10.
• Of credit cards attracting interest charges, the average outstanding balance again recorded the usual seasonal increase in November, up by $45.70 to $2,395.50. The average balance accruing interest is up 4.3 per cent on a year ago (slowest growth in nine months).
• The number of credit card cash advances surprisingly rose by 9.6 per cent in November but was still down 1.8 per cent on a year earlier. Credit card advances have been largely falling in annual terms for four years.
• The number of purchases made on credit cards soared by 13.1 per cent in November after falling 2.9 per cent in October. It was the biggest increase in credit card purchases for a November month.
• The number of purchases made on debit cards rose by 1.6 per cent in October to stand 20.1 per cent higher than a year ago – the fastest annual growth rate in almost eight years.
• The number of just EFTPOS transactions (excludes cash out) rose by 1.4 per cent in November to stand 23.7 per cent higher than a year ago – the fastest annual growth rate on record.
• Cash withdrawn from ATMs in November rose in annual terms in November for the first time in 20 months. The number of cash withdrawals was up 0.7 per cent on a year ago while the value of withdrawals was up by 0.9 per cent.

What is the importance of the economic data?

• The Australian Bureau of Statistics releases data on overseas arrivals and departures is produced monthly and is an indicator of the health of the tourism sector.
• The Reserve Bank releases data on credit and debit card transactions each month. The credit card figures are useful in highlighting consumer borrowing and spending trends.
  What are the implications for interest rates and investors?
• The spike in credit card purchases and cash advances is probably an aberration, but it’s worth watching to ensure that consumer finances aren’t being stressed by higher interest rates.
• The continued easing in migrant numbers must be addressed by the Government or it will risk a lift in inflationary pressures. But the increase in short-term tourism arrivals is certainly encouraging when you consider the heady levels of the Aussie dollar.

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