Sydney petrol prices surge; Home sales rebound

Weekly Petrol Prices; Tourism; Credit/debit cards; Home sales; COVID-19 survey

• Petrol prices: According to the Australian Institute of Petroleum, the national average price of unleaded petrol fell by 0.1 cent to 119.3 cents a litre last week. Sydney’s unleaded pump prices are averaging $1.16 a litre today, up by 7 cents a litre from the lows of the most recent retail price cycle on July 9. Pump prices in the Inner West, North Shore, Eastern Suburbs and Northern Beaches have already surged to around $1.47 a litre, according to real-time fuel app MotorMouth.
• Card purchases: The value of purchases made with credit and charge cards rose by 10.9 per cent in May, but were still down 20.7 per cent on a year ago. The value of debit card purchases rose by 19.9 per cent in May – the biggest lift on record (since records began in July 2003), to be up 9.9 per cent on the year.
• Tourism & education: Tourist arrivals rose by 53.1 per cent in May to 3,440 trips. But arrivals are still down by 99.5 per cent from a year ago. And departures fell by 21.5 per cent in May to a record low 13,380 trips to be down 98.5 per cent from a year ago.
• New detached home sales: In seasonally-adjusted terms, private new detached home sales rose by 77.6 per cent in June. But home sales are still 4.2 per cent lower in the fourth months to June than in the preceding four months. The Housing Industry Association said, “It is a clear indication that HomeBuilder will help protect jobs in the sector in the second half of 2020 and into 2021.”
• COVID-19: Survey of households: According to the Australian Bureau of Statistics (ABS), “The proportion of people with a job working paid hours remained steady at 61 per cent throughout the month of June. The proportion of people who reported they had a job but were not working paid hours fell for the sixth consecutive time since early April, to 2.8 per cent in late June.”

Movements in the petrol price can affect consumer spending, and in turn, prospects for retailers. Tourism data is important for airlines, hotels, shops and transport operators. The credit & debit card spending data provides guidance for consumer-focussed businesses. The home sales data has implications for banks, retailers, developers, building and building material companies.

What does it all mean?

• Petrol prices are approaching the most expensive phase of the retail petrol price cycle in Sydney. The discounting cycle ended last Thursday and servos haven’t wasted any time lifting their prices. In fact, pump prices in parts of metropolitan Sydney have surged to $1.47 a litre today. Drivers in the Inner West, Eastern Suburbs, North Shore and Northern Beaches should consult real-time fuel apps – MotorMouth, MyNRMA and FuelCheck – and shop around as some petrol stations are yet to increase their prices. And motorists elsewhere in the Harbour City should fill up now. Prices appear set to hit $1.50 a litre or more by the weekend.
• And Melburnians – already contending with virus restrictions – will also experience a surge in bowser prices by the weekend due to the conclusion of the latest retail discounting cycle. Unleaded pump prices have already lifted to $1.30-$1.40 a litre in St Kilda, Laverton, Moorabbin and Dandenong. Drivers should fill up now before prices reach the top of the price cycle.
• The easing of social distancing measures and government restrictions in May saw Aussies return to shopping malls in a big way. Retail spending surged by the most on record in May – up 16.9 per cent – so the surge in debit card use isn’t surprising. The use of contactless payments continues to be preferred by both retailers and consumers to cash due to virus hygiene concerns. The value of debit card purchases rose by 19.9 per cent in May – the biggest lift on record (since records began in July 2003).

What do the reports and figures show?

Petrol prices

• According to the Australian Institute of Petroleum, the national average price of unleaded petrol fell by 0.1 cent to 119.3 cents a litre last week. The metropolitan price rose by 0.1 cent to 119.4 cents a litre, but the regional price was down by 0.4 cents to 119.1 cents a litre.
• Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 3.5 cents to 111.1 c/l), Melbourne (down by 2.3 cents to 110.2 c/l), Brisbane (up by 0.6 cents to 136.8 c/l), Adelaide (up by 16.8 cents to 132.0 c/l), Perth (down by 0.7 cents to 119.7 c/l), Darwin (unchanged at 119.1 c/l), Canberra (up by 3.1 cents to 121.6 c/l) and Hobart (up by 0.3 cents at 123.4 c/l).
• The smoothed gross retail margin (2-month rolling average) for unleaded petrol rose fell from 15.34 cents to 15.06 cents in the past week (24-month average: 14.2 cents a litre).
• The national average diesel petrol price rose by 0.2 cents to 120.0 cents a litre over the past week. The metropolitan price also rose by 0.2 cents to 118.1 cents a litre and the regional price was up by 0.1 cent to 121.5 cents a litre.
• Last week the national average wholesale unleaded petrol price (terminal gate or TGP) was down by 0.6 cents to 104.1 cents per litre. Today, the average unleaded TGP stands at 104.5 cents a litre, up by 0.4 cents over the week. The terminal gate diesel price stands at 106.7 cents a litre, up by 0.9 cents over the week.
• MotorMouth records the following average retail prices for unleaded fuel in capital cities today: Sydney 116.2c; Melbourne 114.3c; Brisbane 129.8c; Adelaide 117.2c; Perth 109.8c; Canberra 122.7c; Darwin 119.1c; Hobart 123.6c.
• Last week the key Singapore gasoline price rose by US35 cents a barrel or 0.7 per cent to US$47.85 a barrel. In Australian dollar terms, the Singapore gasoline price rose by 50 cents or 0.7 per cent to $69.04 a barrel or 43.42 cents a litre.

Tourism, migration & education – May 2020

• In original terms, tourist arrivals rose by 53.1 per cent in May to 3,440 trips – up from record lows of 2,250 arrivals in April. But arrivals are still down by 99.5 per cent from a year ago. New Zealanders accounted for 35 per cent or 1,190 of the total number of arrivals. By state, 1,420 arrivals landed in NSW, followed by 770 people in Victoria and 640 people in Queensland.
• Tourist departures (“resident returns – short trips”) fell by 21.5 per cent in May to 13,380 trips and were down 98.5 per cent from a year ago. Departures were the lowest in 44 years (lowest since January 1976 when records began). India was the most popular destination with 2,680 (or 20 per cent) trips for returning Australian residents.
• In May, there were 2,290 permanent and long-term arrivals in Australia – up from record lows (since January 1976) of 1,870 arrivals in April.
• In May, the number of short-term visitors arriving for educational purposes rose to 60 students, up from a record low 30 arrivals in April. In rolling annual terms, international student arrivals fell to 3½-year lows of 500,140 in May – down by 17.8 per cent – the weakest annual growth rate on record (since January 1991).
• According to the Bureau of Statistics (ABS), “Trend data has been suspended from February 2020 and seasonally adjusted data has been suspended from April 2020 due to the impact of the COVID-19 pandemic on international travel.”

Credit and debit card lending – May

• The average credit/charge card balance hit a 13½-year low of $2,835.91 in May. The average limit was just below record highs (highest in 26 years) at $9,901.30. A series break in September prevents getting accurate growth estimates. But the average credit balance has been falling for some time.
• The number of credit and charge card purchases rose by 16.9 per cent in May after declining by 26.6 per cent in April (down 12.6 per cent annual).
• The value of purchases made with credit and charge cards rose by 10.9 per cent in May, but was still down 20.7 per cent on a year ago.
• The number of overseas purchases rose by 8 per cent in May, but were down 45 per cent on the year.
• The value of domestic purchases was up by 9.9 per cent in May, but 17.8 per cent lower on the year.
• Overseas purchases represented just 2.6 per cent of all purchases – a record low (lowest in 12 years).
• The value of debit card purchases rose by 19.9 per cent in May – the biggest lift on record (data compiled since July 2003) to be up 9.9 per cent on the year.
• By value, the sum of credit & debit card purchases rose by 16 per cent in May – the biggest lift on record (since July 2003). Card purchases were down by 5.3 cent on the year. Smoothed annual growth (12-month average) fell from 4.1 per cent to 3.1 per cent in May – the slowest rate on record.
• The number of credit and charge card accounts stood at an 11-year low in May at 14.23 million, down from 14.33 million in April.
• The number of debit card accounts rose 0.7 per cent to 40 million in May. Accounts are up 4.2 per cent on the year.
• The number of ATM transactions continues to fall. The annual average of ATM withdrawals hit 19½-year lows in May at 40.40 million.

Household Impacts of COVID-19 Survey, June 19-24, 2020

• According to the ABS, “This publication provides information on the incidence and nature of impacts due to COVID-19, as experienced by households in Australia. The survey was conducted between 19 June and 24 June 2020.”
• Key findings for the labour market:
  • “The survey found the proportion of Australians aged 18 years and over who had a job working paid hours remained steady at 61 per cent throughout the month of June.
  • The proportion of people who reported they had a job but were not working paid hours fell for the sixth consecutive time since early April, to 2.8 per cent in late June.”

New home sales – June

• In seasonally-adjusted terms, private new detached home sales rose by 77.6 per cent in June.
• According to the Housing Industry Association (HIA), “This leaves New Home Sales in the four months since COVID-19 restrictions came into place, 4.2 per cent lower than in the preceding four months.
• And, “The cancellation of new home projects has improved from its peak in April but remains elevated at 23 per cent.”
• The Housing Industry Association reported that “Western Australia had the largest monthly increase in June compared to May 2020, rising by 211.2 per cent. South Australia followed, increasing by 157.1 per cent. Victoria (+47.8 per cent), Queensland (+43.3 per cent) and New South Wales (+12.6) also recorded significant monthly increases.”
• No data was published by the HIA for multi-unit sales.

What is the importance of the economic data?

• Weekly petrol prices data 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 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 Australian Bureau of Statistics releases data on overseas arrivals and departures, produced monthly and is an indicator of the health of the tourism sector. The figures are also useful in understanding spending trends and tracking migrant numbers – an indicator with widespread implications for employment, housing and spending.
• 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.
• The Housing Industry Association releases data on the sales of new homes each month. The HIA collects the data each month from a sample of Australia’s largest 100 home builders. The survey covers around 15 per cent of the home building industry.
• The Australian Bureau of Statistics (ABS) is providing weekly updates on the coronavirus impacts on job situation, health services, health precautions, social distancing, household stressors, support network, lifestyle changes.

What are the implications for investors?

• Unleaded petrol prices are back at levels last seen in February – prior to the initial virus outbreak in March – with rising crude oil prices and a pick-up in consumer demand for fuel behind the lift. The reduction in crude supply by OPEC and Russia has also contributed to a tripling in crude prices from April’s low.
• The International Energy Agency (IEA) updated their crude oil market outlook on Friday. Global oil demand was revised higher by 0.4 million barrels per day in 2020. The IEA said the contraction in oil demand in the June quarter from COVID‑19 lockdowns wasn’t as bad as first feared as social distancing restrictions were eased from May. The IEA now predicts that global crude demand will increase by 14 per cent to 94.3 million barrels per day in the September quarter. Oil traders will focus this week on the latest online gathering of OPEC+ producers, which is scheduled for Wednesday.
• The rebound in home sales in June will be welcomed by homebuilders and residential construction workers. Government stimulus – including the national ‘HomeBuilder’ and Western Australian ‘Building Bonus’ programs – are providing much needed support to the housing market. That said, falling inbound migration, high unemployment, Melbourne’s second economic lockdown and ongoing virus uncertainty have pushed home prices lower with home sale cancellations remaining elevated.
• Attention now turns to business and consumer confidence surveys released tomorrow. The ‘second wave’ of virus cases in Melbourne and outbreaks in Sydney have the potential to weigh on confidence after the Bureau of Statistics revealed today that the easing of restrictions in May and June improved Aussies’ mental health.
• Federal Treasurer Josh Frydenberg said today that there will be a “second phase of income support” announced in the July 23 Mini-Budget and, “so it is fair to say in Victoria, with the lockdown, which is going to be harsh on businesses and households, that our announcements on the 23rd will take into account the Victorian circumstances.”
• Ongoing income support through the JobKeeper and JobSeeker programs could yet support confidence, especially with the Treasurer confirming that Australia’s effective unemployment rate – which includes Aussies opting not to search for work – is “around 13.3 per cent right now.”