Petrol slides; jobs grow; housing slows

Weekly petrol price report; Job ads; Home loans; Credit & debit cards

• Petrol prices ease: According to the Australian Institute of Petroleum, the national average Australian price of petrol fell by 2.2 cents per litre last week to 119.7 cents a litre – the lowest in over 4 years.
• Hiring lifts again: Job advertisements rose by 1.8 per cent in December – the seventh straight gain.
• Credit cards: The average credit card balance recorded a seasonal increase of $52.50 (1.7 per cent) to $3,223 in November. But compared with a year ago, the average credit card balance was up just 0.4 per cent – well below the 2.3 per cent rate of inflation.
• Home loans: The number of home loans (commitments) for people who want to live in them (owner-occupiers) fell by 0.7 per cent in November. The value of all loans fell by 1.0 per cent.

What does it all mean?

• The good news continues for motorists – the Singapore gasoline price continues to slide and motorists may see another 4-5 cents taken off pump prices in the next fortnight. The Singapore gasoline price in Australian dollar terms is the lowest in six years, suggesting that more petrol retailers will drop prices to near $1.00 a litre
• The average household is saving $45 a month on filling up the car with petrol compared with a year ago.
• Apart from petrol, the other ‘good news’ stories today are the continued signs of improvement in the job market and data showing that heat continues to come out of the housing market.
• The bottom line is that interest rate settings are going nowhere. The fall in petrol prices is acting like a de facto rate cut, reducing the need for additional interest rate stimulus. And while the job market is improving, it’s still early days in the recovery process.

What do the figures show?

Petrol prices

• According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 2.2 cents per litre to 119.7 cents a litre in the week to January 11. The metropolitan petrol price fell by 2.3 cents to 115.0 cents per litre and the regional price fell by 2.2 cents to 129.2 cents per litre.
• The national average Australian price of diesel petrol fell by 2.2 cents to 137.8 c/l in the week to January 11. Last week the metropolitan price fell by 2.4 cents to 136.6 c/l, while the regional average price fell by 2.1 cents to 138.8 c/l.
• Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 2.1 cents to 112.3 c/l), Melbourne (down by 2.7 cents to 112.1 c/l), Brisbane (down by 2.2 cents to 118.4 c/l), Adelaide (down by 2.7 cents to 109.6 c/l), Perth (down by 1.5 cents to 118.0 c/l), Darwin (down by 3.5 cents to 143.2 c/l), Canberra (down by 3.8 c/l to 130.6 c/l) and Hobart (down by 2.3 c/l to 134.2 c/l).
• Today, the national average wholesale (terminal gate) unleaded petrol price stands at 105.83 cents a litre, down 4.8 cents on the previous week to a 6-year low (January 21 2009).
• Last week the key Singapore gasoline price fell by US$7.60 or 11.6 per cent to a 5½-year low of US$57.70 a barrel. In Australian dollar terms the Singapore gasoline price fell by $9.45 a barrel or 11.8 per cent last week to $70.90 a barrel or 44.59 cents a litre – the lowest level since the week of January 11 2009.
• Figures from MotorMouth show that all capital city petrol prices fell last week.

Job Advertisements

• Job advertisements rose by 1.8 per cent in December – the seventh straight gain – to the highest levels in over two years. Newspaper advertisements rose by 3.0 per cent in the month but the far larger component of internet ads rose by 1.8 per cent. Job ads were up 11.4 per cent on a year ago. In trend terms, ads rose by 0.5 per cent in the month, the 14th straight gain.

Housing finance

• The number of new owner-occupier housing loans (commitments) fell by 0.7 per cent in November. Excluding the refinancing of dwellings, the number of loans was down by 0.8 per cent.
• The number of loans by owner-occupiers for the construction of homes fell by 2.6 per cent in November – first fall in three months. The value of construction loans fell by 2.7 per cent in the month.
• The number of loans by owner-occupiers to buy newly-erected dwellings rose by 1.3 per cent in November and the value of loans rose by 4.0 per cent.
• The number of loans by owner-occupiers for the purchase of established dwellings (excluding refinancing) fell by 0.5 per cent in November and the value of loans fell by 0.2 per cent.
• The number of refinancing transactions by owner-occupiers fell by 0.6 per cent in November – first fall in five months. The value of refinancing transactions rose by 0.1 per cent.
• The value of new housing commitments (owner occupier and investment) was down by 1.0 per cent in November with owner-occupier loans down by 0.2 per cent while investment loans fell by 2.2 per cent.
• The value of loans by owner-occupiers and investors to build new homes eased by 5.3 per cent from $2.66 billion in October to $2.52 billion in November.
• The proportion of first-time buyers in the home loan market rose from a record low of 11.4 per cent to 11.6 per cent in November. First home buyer loans remain well below the long-term average of 20.0 per cent.Fixed rate loans rose from 15.4 per cent to 15.7 per cent of all loans in November. And the average home loan across Australia stood at $336,000 in November, up 4.9 per cent on a year ago.

Credit & debit card lending:

• Figures released from the Reserve Bank show that the average credit card balance recorded a seasonal increase of $52.50 (1.7 per cent) to $3,223 in November. But compared with a year ago, the average credit card balance was up just 0.4 per cent. In smoothed terms (12 month average) the average balance was down by 0.6 per cent.
• Of credit cards attracting interest charges, the average outstanding balance fell by $16.20 in November (0.8 per cent) after falling by $34.40 in September. The average balance accruing interest is down by 2.9 per cent on a year ago. In smoothed terms (12 month average) the average balance was down by 3.1 per cent.
• In November the number of credit card accounts was up 1.2 per cent on a year ago.
• The average credit card limit rose by $6.80 to $8,981.90 in November. The average credit card limit rose by 2.3 per cent in the year to November. Usage of credit card limits recorded a seasonal increase in November from 35.3 per cent to 35.9 per cent in November but remained below 36.6 per cent a year ago.
• Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory’s metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.
• The monthly Job Advertisements release is a leading employment indicator. Employers only seek additional staff if business activity is strong, and more importantly, if they expect that conditions will remain favourable in coming months. It takes around 5-6 months for the new staff to be added to the payrolls. But a fall in job advertisements would have a more immediate impact on monthly employment estimates.
• Housing Finance data is produced monthly by the Bureau of Statistics and shows commitments by lenders, such as banks, to provide finance for housing purposes. The lending figures relate to those looking to buy or build homes to live in as well as those seeking to buy or build homes for investment purposes. Generally people get their finance organised first, so the figures are regarded as a leading indicator on the housing market.
• 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.
• Interest rate settings are going nowhere. A lower dollar and lower petrol prices are stimulating the economy. Job ads are rising, but from a low base. And heat is coming out of housing – irrational exuberance has been arrested, population growth has slowed and higher home prices are causing buyers to be a little more circumspect. Add in the fact that consumers are still careful about credit card use and the overall situation must delight Reserve Bank policymakers.
• With petrol prices sliding in capital cities, spare a thought for regional areas. The average regional price is 14 cents higher than metro areas. And while some Sydney stations have toyed with 99.9c a litre, in Tennant Creek petrol rose last week to 164.4c a litre.

What is the importance of the economic data?

• Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory’s metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.
• The monthly Job Advertisements release is a leading employment indicator. Employers only seek additional staff if business activity is strong, and more importantly, if they expect that conditions will remain favourable in coming months. It takes around 5-6 months for the new staff to be added to the payrolls. But a fall in job advertisements would have a more immediate impact on monthly employment estimates.
• Housing Finance data is produced monthly by the Bureau of Statistics and shows commitments by lenders, such as banks, to provide finance for housing purposes. The lending figures relate to those looking to buy or build homes to live in as well as those seeking to buy or build homes for investment purposes. Generally people get their finance organised first, so the figures are regarded as a leading indicator on the housing market.
• 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?

• Interest rate settings are going nowhere. A lower dollar and lower petrol prices are stimulating the economy. Job ads are rising, but from a low base. And heat is coming out of housing – irrational exuberance has been arrested, population growth has slowed and higher home prices are causing buyers to be a little more circumspect. Add in the fact that consumers are still careful about credit card use and the overall situation must delight Reserve Bank policymakers.
• With petrol prices sliding in capital cities, spare a thought for regional areas. The average regional price is 14 cents higher than metro areas. And while some Sydney stations have toyed with 99.9c a litre, in Tennant Creek petrol rose last week to 164.4c a litre.