Petrol prices; Lending Finance; Credit & debit card lending

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  Petrol prices falling.

  Petrol prices: According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 2.3 cents a litre to 151.2 c/l in the week to August 11. CommSec expects fuel prices to fall by a further 2-3 cents a litre in the next fortnight.

• Lending lifts to five-year high. Total lending finance rose by 6.9 per cent in June – marking the strongest increase in 15 months. Lending is up by 12.2 per cent on a year ago.
• Record fall in credit card debt. The average credit card balance fell by 3.7 per cent in the year to June, the biggest drop in 19 years of records. Average use of credit and debit cards is at record highs.

What does it all mean?

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Simon Ewing has been appointed as Head of Loan Syndications. Simon will lead the Loan Syndications team within the Corporate & Specialised Finance division.

Based in Sydney, Mr Ewing will report to the Global Head of Loan Markets, Lloyds TSB Bank plc, Ian Fitzgerald, and locally to Steven Mixter, Head of Portfolio and Balance Sheet Management.

The Loan Syndication team structures, advises, prices, executes and distributes multi-bank credit facilities. It has a global distribution capability with offices in London, Hong Kong, New York and Sydney with a team of 17 dedicated distribution professionals.

Prior to taking up this role, Mr Ewing spent 16 years in numerous syndicated loan market roles in both London and Sydney, with AIB Capital Markets Acquisition Finance, Mitsubishi Trust & Banking Corporation and JPMorgan.  He has also recently been appointed to the Asia Pacific Loan Market Association (APLMA) management committee.

Mr Stephen Skulley, Managing Director, Corporate &Specialised Finance, BOS International said:

“Simon brings a raft of new capabilities to the Australasian region including a new strength in underwriting.  His knowledge of local investors and his understanding of local markets will undoubtedly strengthen relationships with existing clients and pave the way for new opportunities in the region.”

“The appointment is a great first step in our strategy to build our product capability in order to service a broader client base,” Stephen said.

Joining Simon’s team is Angela Powell, Associate Director.  Angela was promoted internally from the Acquisition Finance team.  Angela has been with the company for five years and transferred back to Sydney from the London office in 2007.  Prior to this, she held roles at HSBC in the Global Markets division in London and with ING in both Amsterdam and Sydney.

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Key findings of the report include:

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What does it all mean?

• Interest rate hikes always tend to hit the economy with a lag and this time it is no different. The November rate hike only started to have an impact on lending finance in January and lending slumped further in February. Lending has now fallen by almost 12 per cent in the first two months of 2011 and is holding at the weakest levels in over five years.
• Lending finance is a forward-looking indicator of economic activity – as any rise in borrowings will eventually translate to a pickup in spending and production. The impact of the floods is clearly complicating analysis of the lending data, but the sustained softness of consumer borrowing remains the key concern – especially given that personal finance has fallen for six out of the last eight months.
• The key issue for the Reserve Bank is how long will this weakness last. In late 2010 there were tentative signs of thawing in the conservative attitudes of consumers and businesses, but it seems that once again activity levels have tracked backwards. The Reserve Bank would need to see some improvement in economic conditions before justifying the next rate hike. CommSec expects the Reserve Bank to stay on the interest rate sidelines for at least the next three months – especially given that inflation looks to be well contained at present.
• Petrol prices continue to creep higher and have now reached the highest levels in 2½ years. And unfortunately for motorists it is unlikely to get any better over the next couple of weeks.
• The potential threats to oil supplies from the Middle East and North Africa remains the key driver of near term prices. And over the past fortnight, the Singapore unleaded fuel price has surged by almost US$8 a barrel and is holding at 32-month highs. The one advantage that Aussie motorists have is the strength of the Australian dollar, but even the stronger domestic currency can only do so much, and as such part of the increase in the global oil price will need to filter through to domestic pump prices.
• The terminal gate price (wholesale) is certainly responding, lifting by a further 1.7 cents a litre over the past week. Given that wholesale prices eased modestly two weeks ago, CommSec expects prices to track sideways over the next couple of days. However in the second half of the month it looks like motorists will be paying between 3-5 cents a litre more for fuel.

What do the figures show?

Lending Finance:

• Total new lending commitments (housing, personal, commercial and lease finance) fell by 5.7 per cent in February after sliding by 6.1 per cent in January. However over the prior four months lending was up a much healthier 12.1 per cent in cumulative terms. Lending totalled $49.3 billion in February – the weakest reading in over 5 years. Overall lending was down 4.2 per cent over the year.
• All housing finance (owner occupier & commercial) fell by 4.6 per cent in February, after sliding by 5.3 per cent in January.
• Commercial finance fell by 6.6 per cent in February. Within commercial commitments, fixed lending fell by 9.9 per cent while revolving credit rose by 1.0 per cent. Commercial loans are down 1.7 per cent on a year ago.
• Personal finance fell by 3.5 per cent in February – marking the sixth fall in the past eight months. Within personal commitments, fixed lending fell by 5.0 per cent while revolving credit fell by 1.8 per cent. Personal loans are down 11.7 per cent on a year ago and currently stand at two-year lows.
• Lease finance fell by 10.4 per cent in February and loans are up 4.1 per cent over the year.

Petrol prices:

• According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol rose by 0.3 cents a litre to 143.9 cents a litre in the week to April 10. The metropolitan price rose by 0.5 c/l to 143.5 c/l, while the regional average price remained flat at 144.8 c/l.
• Average petrol prices across states over the past week were: Sydney (up 2.5 cents to 142.3 c/l), Melbourne (down 0.7 cents to 142.8 c/l), Brisbane (down 1.7 cents to 145.2 c/l), Adelaide (up 3.3 cents to 145.0 c/l), Perth (down 0.6 cents to 143.3 c/l), Darwin (down 1.5 cents to 147.0 c/l), Canberra (down 0.4 cents to 146.5 c/l) and Hobart flat at 149.9 c/l).
• The national average wholesale (terminal gate) rose to a fresh 30-month high of 136.1 cents a litre today, up by 1.7 cents a litre over the past week.
• Last week, the key Singapore unleaded petrol price rose by US$5.40 (4.3 per cent) to US$130.46 a barrel – a 32- month high. In Australian dollar terms the Singapore gasoline price rose by a more sedate $3.10 (2.6 per cent) over the week to $123.99 a barrel.

What is the importance of the economic data?

• Lending Finance is released monthly by the Bureau of Statistics and contains figures on new housing, personal, commercial and lease finance commitments. The importance of the data lies in what it reveals about the appropriateness of interest rate settings, confidence and spending levels in the economy.
• Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum. 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.

What are the implications for interest rates and investors?

• The sustained lift in the price of petrol is further bad news for motorists, taking precious spending dollars out of consumer pockets. Retailers already have to contend with the effects of the weather on seasonal spending, consumer conservatism and higher utility prices. CommSec doesn’t expect a rate hike until at least August.

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• Lending slumped in January. Total lending finance fell for the first time in the five months – down by 6.0 per cent in January. Lending totalled $52.6 billion in January, up 5.8 per cent over the year. Over the prior four months cumulative monthly gains in lending finance stood at 12.8 per cent.
• RBA Board on interest rate sidelines. The decision to leave interest rates on hold in March was due to an array of factors, however the key driver was the negative impact on the economy from the floods. The subdued level of consumer spending also provided Board members with further reason to hold off on near-term rate hikes.
• Australian new car sales recorded a modest 0.2 per cent rise in February.
• According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol rose by 3.5 cents per litre to 142.7 cents a litre in the week to March 13 – a near 29 month high. Over the past month the national average price has lifted by 7.9 cents per litre.
• Brisbane has the highest petrol price across the capital cities, while Canberra is the lowest.
• The futures market has now priced in a 55 per cent chance of a rate cut at the April meeting in light of the Japanese nuclear crisis.

What does it all mean?

• Lending finance is a forward-looking indicator of economic activity – as any rise in borrowings will eventually translate to a pickup in spending and production. The floods are clearly complicating analysis of the lending data, but the continued softness of consumer borrowing remains a concern.
• In late 2010 there were tentative signs of thawing in the conservative attitudes of consumers and businesses. Lending finance had risen for four straight months prior to the sharp 6 per cent fall in January. The key issue going forward is: how long will the weakness last? Notwithstanding the floods, the Reserve Bank would clearly want to see some improvement in lending over February and March.
• The weakness in consumer borrowings is a major concern, especially given that personal finance has fallen for five out of the last seven months. CommSec expects the Reserve Bank is likely to stay on the interest rate sidelines – especially given that inflation looks to be well contained at present.

• The latest Reserve Bank Board minutes identified the Queensland floods as a key reason for interest rates remaining on hold in March. And as the Reserve Bank has noted on recent occasions, the lack of consumer activity is not all bad news – ensuring that inflationary pressures are contained in the near term. Even the recent slide in lending is unlikely to surprise the Reserve Bank, especially given that it was expecting growth to be sluggish in the first half of 2011.
• The minutes revealed that Board members were generally optimistic about the outlook, noting strength in business investment plans as well as the sustained improvement in labour market conditions. However given that interest rate were “mildly restrictive” – in other words acting to slow the Australian economy – a rate pause seemed the most logical outcome.
• After a modest pickup in activity in the mid part of 2010, car sales are now effectively going nowhere with more signs of buyer caution once again emerging. In annual terms vehicle sales are down almost 2 per cent on a year ago. The rate hikes of late last year are no doubt resulting in potential car buyers being more circumspect about future purchases. In fact in trend terms car sales have been broadly flat for the last ten months.
• What is required in the near term is for interest rates to remain on hold, allowing consumers and businesses to adjust to the higher interest rates now in place and, in turn, start spending again.
• Brisbane was hit hard by the floods and now it has the highest petrol price of any capital city. The lofty petrol price is clearly an impediment to economic recovery.

What do the figures show?

Lending Finance:

• Total new lending commitments (housing, personal, commercial and lease finance) fell by 6.0 per cent in January after rising 4.3 per cent in December. However over the prior four months lending was up a much healthier 12.8 per cent in cumulative terms. Lending totalled $52.6 billion in January, up 5.8 per cent over the year.
• All housing finance (owner occupier & commercial) fell by 4.8 per cent in January – the first fall in seven months.
• Commercial finance fell by 5.8 per cent in January. Within commercial commitments, fixed lending fell by 4.0 per cent while revolving credit slumped by 9.7 per cent. Commercial loans are up 13.9 per cent on a year ago.
• Personal finance fell by 9.5 per cent in January – marking the fifth fall in the past seven months. Within personal commitments, fixed lending fell by 4.5 per cent while revolving credit fell by 14.5 per cent. Personal loans are down 6.2 cent on a year ago.
• Lease finance fell by 1.3 per cent in January and loans are down 6.2 per cent over the year.

New car sales

• New car sales rose by 0.2 per cent in February after sliding by 2.4 per cent in January. Total car sales are down 1.5 per cent on a year ago.
• Passenger car sales fell by 2.7 per cent in the month, sports utility vehicles rose by 4.1 per cent while “other” vehicles (trucks, utes etc) were 4.2 per cent higher. In annual terms “other” vehicle sales were up 1.4 per cent on a year ago.
• In rolling annual terms, 236,260 SUV’s have been sold in the 12 months to February – the second highest reading on record. Overall SUV sales are up 4.6 per cent on a year ago.

Petrol prices:

• According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol rose by 3.5 cents a litre to 142.7 cents a litre in the week to March 13. The metropolitan price rose by 3.7 c/l to 142.8 c/l, while the regional average price rose by 3.3 c/l to 142.6 c/l.
• Average petrol prices across states over the past week were: Sydney (up 4.5 cents to 143.2 c/l), Melbourne (up 3.5 cents to 142.2 c/l), Brisbane (up 4.9 cents to 145.6 c/l), Adelaide (up 1.6 cents to 141.1 c/l), Perth (up 2.7 cents to 141.5 c/l), Darwin (up 1.3 cents to 144.4 c/l), Canberra (up 3.3 cents to 137.3 c/l) and Hobart (up 1.4 cents to 145.5 c/l).

Minutes from the March 2011 Reserve Bank Board meeting

Consumer spending

• Retail sales data had shown subdued spending in late 2010, including a small fall in real spending for the December quarter. Liaison with retailers had suggested some improvement in conditions in early 2011, with sales data for January released during the Board meeting showing moderate growth in the month. Consumer confidence had softened in early 2011 to be only modestly above average levels, although it was difficult to determine how much of this decline was due to the floods and the cyclone.

Business conditions

• Most business surveys showed a deterioration in current conditions in January, and there was a substantial reduction in hours worked in Queensland. However, business confidence in late January had bounced back after falling in the previous survey taken in early January.

Employment

• There had been another solid rise in employment in January, with the unemployment rate remaining at 5 per cent. Forward-looking indicators of employment from surveys and liaison pointed to solid employment growth over the coming year. Wage growth had picked up over the second half of 2010, with the quarterly outcomes for the wage price index back at around their average rate for the 2005–2007 period. Wage outcomes had been stronger in the mining sector.

The decision

• Interest rates on loans were slightly above average, a level reached after the monetary policy decision taken in November 2010. Members judged that this mildly restrictive stance of policy continued to be appropriate. The Board therefore decided to leave the cash rate unchanged.

What is the importance of the economic data?

• Lending Finance is released monthly by the Bureau of Statistics and contains figures on new housing, personal, commercial and lease finance commitments. The importance of the data lies in what it reveals about the appropriateness of interest rate settings, confidence and spending levels in the economy.
• The Reserve Bank releases minutes of its monthly Board meeting a fortnight after the event. The minutes give a guide to Reserve Bank thinking on interest rate settings.
• The Australian Bureau of Statistics (ABS) provides monthly estimates of car sales in seasonally adjusted and trend terms after receiving the actual sales data from the car industry. The figures highlight the strength of consumer spending as well as conditions facing auto & components companies.

What are the implications for interest rates and investors?

• Overall the latest Board minutes suggest that the Reserve Bank has a degree of flexibility on the interest rate front. And while the near term domestic data looks patchy the Reserve Bank remains confident about the outlook.
• CommSec doesn’t expect a rate hike until at least May, however the risks are that the Reserve Bank will maintain stable rates for longer.
• Interestingly current futures market pricing indicates a 55 per cent chance of a rate cut at the April meeting in light of the Japanese nuclear crisis.

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• Motorists need to prepare for higher petrol prices. The terminal gate or wholesale price of petrol leapt by over 2 cents a litre last week to 26-month highs. CommSec expects petrol prices to rise 3 cents a litre over the coming fortnight.
• Inflation is under control. The TD Securities-Melbourne Institute monthly inflation gauge rose by just 0.2 per cent in December. Excluding volatile items, prices were flat – the fifth straight month of negligible growth.
• Lending rose in November. Total lending finance rose for the third consecutive month up by 1.7 per cent in November. Lending totalled $53.2 billion in November, up 4.4 per cent over the year but up a much healthier 7.7 per cent in the past three months.
• Australian new car sales recorded a healthy rise in December. Car sales rose by 0.8 per cent in December after a 0.5 per cent rise in November. Passenger car sales rose by 4.8 per cent in the month.

What does it all mean?

• Motorists need to prepare for higher petrol prices over the next fortnight. The wholesale price of petrol leapt by almost two cents a litre last week and more than likely the higher cost will be passed through to motorists over the next 7-10 days.
• Not only has the wholesale price continued to rise but increased competition has resulted in petrol retailers selling fuel in some states at or near cost – which is clearly a unsustainable scenario in the longer term. Even on the world stage the Singapore unleaded price is holding just shy of the 27-month highs reached last week. And looking forward the fortunes of the Australian dollar will determine by just what magnitude petrol prices will rise.
• The latest TD inflation gauge suggests that inflation remains well and truly under control at present. In December price rose by just a 0.2 per cent rise. And while the annualised rate of inflation is holding at a seemingly unhealthy 3.8 per cent it is largely a reflection of higher readings in the latter part of 2009 and early 2010 than what is taking place now. In fact over the past six months inflation has been negligible and the annualised result is holding at a more sedate level of 2.6 per cent.

• Strip out volatile elements like fruit and vegetable prices, and petrol and inflation is largely non-existent in Australia. But that is no surprise – retailers of all descriptions have been telling us that is the case for some time. In the current environment businesses are trimming prices to get people to part with their cash, while the strength of the Australian dollar is working at keeping imported inflation low. Once volatile items are excluded, inflation has hardly budged over the past five months, and even the three month annualised rate of inflation is amazingly just 0.1 per cent.
• Looking forward the increase in global oil prices is likely to have a feed through effect on the inflation front. However there is not a lot that the Reserve Bank can do about changes at the petrol bowser or the floods in Queensland – a key driver of changes in fruit and vegetable prices. If underlying inflationary pressures remain contained, then the Reserve Bank can stay on the sidelines until well into 2011.
• Lending finance is effectively a forward looking indicator of economic activity – given that any rise in borrowings will eventually translate to a pickup in spending and activity. And while the conservative attitudes of consumers and businesses have kept borrowings weak, there are signs that things are thawing. Lending finance has risen for the third straight month and in annual terms the growth rate is a much healthier 4.4 per cent – marking the best result in 14-months.
• The overall improvement in lending is only in its infancy, and given the November rate hike is yet to have a full impact on the economy, the argument for a period of interest rate stability remains the best outcome. The Reserve Bank would be best served by staying on the interest sidelines – especially given that inflation looks to be well contained at present.
• The latest result on car sales is certainly encouraging, even more so given the surge in sales of passenger cars over the month of December. In seasonally adjusted terms passenger car sales recorded the best monthly increase in eight months. No doubt the strength in the labour market is the clear underlying driver in the pickup in activity. With a sustained increase in employment and resulting improvement in job security, households are once again tentatively spending on big ticket items.

What do the figures show?

Inflation gauge:

• The monthly inflation gauge rose by 0.2 per cent in December after lifting by 0.4 per cent in November. The annual rate of inflation eased from 3.9 per cent to 3.8 per cent.
• Excluding volatile items like petrol and fruit & vegetables, the inflation gauge remained unchanged after rising by 0.1 per cent in November. The annual rate of core inflation fell from 3.2 per cent to 3.0 per cent. The three-month annualised rate of inflation eased from 0.7 per cent to just 0.1 per cent.
• The trimmed mean inflation measure rose by 0.3 per cent in December. The trimmed mean measure is up 3.2 per cent on a year ago while the three-month annualised rate rose from 1.9 per cent to 2.8 per cent.
• TD Securities noted that “Contributing most to the overall change in December were price rises for automotive fuel, fruit and vegetables, and holiday travel and accommodation. These were offset by falls in prices for audio, visual and computing, sport and other recreation, and books, newspapers and magazines. The automotive fuel price increased by 4.7 per cent in December, and while the price of rent was unchanged in the month, annual rent inflation rose to 2.3 per cent, the highest reading since May 2009.”

Petrol prices:

• The national average wholesale (terminal gate) price hit a near 26-month low high of 125.5 cents a litre today. Over the past week the terminal gate price has risen by 2 cents a litre. Just over two months ago (October 1) the terminal gate price stood at an 11-month low of 111.6c/l.
• Last week, the key Singapore unleaded petrol price fell by US33 cents (0.3 per cent) to US$105.02 a barrel. And in Australian dollar terms the Singapore gasoline price fell by 66 cents (0.6 per cent) over the week to $105.40 a barrel.

Lending Finance:

• Total new lending commitments (housing, personal, commercial and lease finance) rose by 1.7 per cent in November after rising 3.3 per cent in October. Lending totalled $53.2 billion in November, up 4.4 per cent over the year but up a much healthier 7.7 per cent in the past three months.
• All housing finance (owner occupier & commercial) rose by 1.1 per cent in November, the third straight monthly gain.
• Commercial finance rose by 1.0 per cent in November. Within commercial commitments, fixed lending rose by just 3.8 per cent but revolving credit slumped by 4.9 per cent. Commercial loans are up 11.1 per cent on a year ago.
• Personal finance rose by 2.2 per cent in November, only the second rise in five months. Within personal commitments, fixed lending rose by 2.0 per cent while revolving credit rose by 2.5 per cent. Personal loans are up 9.2 per cent on a year ago.
• Within fixed lending, all categories are higher than a year ago except residential blocks of land (down 19.5 per cent).
• Lease finance rose by 0.5 per cent in November and loans are up 13.7 per cent over the year.

New car sales

• New car sales rose by 0.8 per cent in December after rising by 0.5 per cent in November.
• Passenger car sales rose by 4.8 per cent in the month, sports utility vehicles fell by 10.7 per cent while “other” vehicles (trucks, utes etc) were up 3.1 per cent. In annual terms “other” vehicle sales were down 24.8 per cent on a year ago.
• In rolling annual terms, 235,285 SUV’s have been sold in the 12 months to December. However SUV sales are down 7.6 per cent on a year ago.

What is the importance of the economic data?

• The TD Securities/Melbourne Institute Monthly Inflation Gauge is designed to “provide a timely and accurate monthly measure of inflation in Australia”. The Bureau of Statistics only releases the Consumer Price Index on a quarterly basis.
• Lending Finance is released monthly by the Bureau of Statistics and contains figures on new housing, personal, commercial and lease finance commitments. The importance of the data lies in what it reveals about the appropriateness of interest rate settings, confidence and spending levels in the economy.
• Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum. 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.
• The Australian Bureau of Statistics (ABS) provides monthly estimates of car sales in seasonally adjusted and trend terms after receiving the actual sales data from the car industry. The figures highlight the strength of consumer spending as well as conditions facing auto & components companies.

What are the implications for interest rates and investors?

• Inflation is under control at present but some of the volatile elements like petrol and fruit and vegetable prices are starting to move higher. This complicates the situation for the Reserve Bank. While the Reserve Bank can’t lift rates to respond to factors outside its control, the risk is that higher inflation may become entrenched, with businesses using the higher inflation base to justify price increases.
• The lift in the price of petrol is further bad news for motorists, taking precious spending dollars out of consumer pockets. Retailers already have to contend with the effects of La Nina on seasonal spending, consumer conservatism and higher utility prices.

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• Petrol prices to lift further. The terminal gate or wholesale price of petrol rose by another 3 cents a litre last week to 25-month highs. Over the past fortnight wholesale petrol prices have lifted 6.5 cents but the pump price has so far only risen by around 3.5 cents.
• Credit card balances fell in October. The average credit card balance stood at a $3,244.80 in October, down $17.10 on September. The average credit card balance has been slashed by $39 in the past four months – the biggest fall in 15 years apart from the GFC period in early 2009.
• Consumers shun credit cards. Purchases on credit cards fell 2.9 per cent in October but purchases on debit cards rose 2.7 per cent in the month.
• Lending rose in October, ahead of the RBA rate hike. Total lending finance rose by 3.7 per cent in October, with all but personal finance advancing.

What does it all mean?

• Perhaps it is a Christmas present from the oil companies, but so far prices at the petrol pump have nowhere matched the lift in the wholesale (terminal gate prices). Since the lows in early October, the wholesale price has increased almost 11 cents a litre while the pump price has gained around 6 cents. Even over the past fortnight the pump price has only recorded half the gain at the refinery terminal.
• Oil companies had been lifting margins for some time, so perhaps competitive forces are working to give something back to motorists. In 2009 the difference between the terminal gate and pump price was 7.3 cents and in 2010 it was 7.9 cents. In the latest week the difference was 6.7 cents a litre.
• The bad news for motorists is that the petrol price probably will lift another 3-5 cents a litre by Christmas. While the Singapore gasoline price actually eased in Australian dollar terms last week, the Australian wholesale price hasn’t peaked and motorists have so far been spared from the higher prices.
• The monthly cost of filling up the petrol tank will probably reach $187 in late December, up $20 from mid September. Effectively this has the same effect as a quarter per cent rate hike on a $120,000 mortgage.
• Consumer conservatism was on show for all to see in the latest credit card figures. Aussie consumers reduced outstanding balances on credit cards and increasingly used their own money (debit cards) to make purchases rather than put them on credit. The point to note is that the changes preceded the Reserve Bank rate hike in November.
• The news for retailers isn’t good. The price of petrol is going up, acting like a de facto rate hike. At the same time consumers have slashed credit card debt by the most since the GFC.

What do the figures show?

Credit & debit card activity:

• Figures released from the Reserve Bank show that the average credit card balance stood at $3,244.80 in October, down $17.10 on September. The average credit card balance is up 3.3 per cent on a year earlier the slowest annual growth in eight months. Over the past four month, the average credit card balance has been slashed by $39.10. Apart from the GFC period in early 2009 this is the biggest reduction in credit card debt for over 15 years.
• Of credit cards attracting interest charges, the average outstanding balance fell by $35.50 in October after falling by $11.50 in September. The average balance accruing interest stands at $2349.80, up 4.3 per cent on a year ago (slowest growth in eight months) and up 4.2 per cent on a “smoothed” basis.
• The number of credit card cash advances fell by 3.1 per cent in October and was down 8.8 per cent on a year earlier. Credit card advances have been largely falling in annual terms for around four years.
• The number of purchases made on credit cards fell by 2.9 per cent in October after falling 0.8 per cent in September. Purchases made on credit cards were just 2.0 per cent higher than a year earlier, the slowest growth in a year.
• The number of purchases made on debit cards rose by 2.7 per cent in October to stand 17.1 per cent higher than a year ago.
• The number of just EFTPOS transactions in October (excludes cash out) rose by 2.7 per cent to stand 18.6 per cent higher than a year ago.
• Cash withdrawn from ATMs in October continued to fall in annual terms. The number of cash withdrawals was down 1.6 per cent on a year ago while the value of withdrawals fell by 2.6 per cent.

Petrol prices:

• According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol rose by 2.9 cents per litre to 128.6 cents a litre in the week to December 12. The metropolitan price rose by 2.6c/l to 128.6c/l, while the regional average price rose by 3.4c/l to 128.6c/l.
• Petrol prices across states in the past week were: Sydney (up 2.6 cents to 128.0c/l), Melbourne (up 2.8 cents to 128.6c/l), Brisbane (up 2.2 cents to 130.5c/l), Adelaide (up 3.4 cents to 128.6c/l), Perth (up 2.2 cents to 127.3c/l), Darwin (up 3.2 cents to 130.8 c/l), Canberra (up 2.5 cents to 129.4c/l) and Hobart (up 3.7 cents to 133.5c/l).
• The national average wholesale (terminal gate) price today hit a 25-month low high of 123.4 cents a litre, up 3 cents over the week. Just over two months ago (October 1) the terminal gate price stood at an 11-month low of 111.6c/l.
• Last week, the key Singapore unleaded petrol price rose by US32c (0.3 per cent) to a 25-month high of US$101.60 a barrel. But in Australian dollar terms the Singapore gasoline price fell by 68c (0.7 per cent) over the week to $103.12 a barrel.

Lending Finance:

• Total new lending commitments (housing, personal, commercial and lease finance) rose by 3.7 per cent in October after rising 2.3 per cent in September and falling 5.5 per cent in August. Lending totalled $52.2 billion in October, up 2.2 per cent over the year but up only 0.3 per cent in the past three months.
• All housing finance (owner occupier & commercial) rose by 2.8 per cent in October, the fourth straight gain but ahead of the Reserve Bank rate hike in November. However of note, loans for the construction of dwellings (investor and owner-occupier) fell by 2.9 per cent in October to be down 24.9 per cent over the year.
• Commercial finance rose by 5.2 per cent in October. Within commercial commitments, fixed lending rose by just 0.3 per cent but revolving credit soared by 17.4 per cent. Commercial loans are up 12.3 per cent on a year ago.
• Personal finance fell by 0.4 per cent in October, the third fall in four months. Within personal commitments, fixed lending rose by 1.9 per cent while revolving credit fell by 2.5 per cent. Personal loans are up 7.9 per cent on a year ago.
• Within fixed lending, all categories are higher than a year ago except refinancing (down 1.1 per cent) and residential blocks of land (down 32.9 per cent).
• Lease finance rose by 3.1 per cent in October and loans are up 9.5 per cent over the year.

What is the importance of the economic data?

• 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.
• Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum. 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.
• Lending Finance is released monthly by the Bureau of Statistics and contains figures on new housing, personal, commercial and lease finance commitments. The importance of the data lies in what it reveals about the appropriateness of interest rate settings, confidence and spending levels in the economy.

What are the implications for interest rates and investors?

• There is no let up for retailers. Petrol prices are rising and consumers are spending warily. Retailers will need to keep discounting in order to get people to part with their cash.
• The Reserve Bank believes consumer conservatism will continue for some time yet – and based on current evidence, it looks like being right. The longer this new era of conservatism continues, the longer the Reserve Bank can stay on the sidelines.
• The latest data on construction lending and lending to buy blocks of land further points to slower home building activity ahead.

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• According to the Australian Institute of Petroleum the national average retail pump price rose 0.5 cents a litre last week to 124.3 cents a litre – a three month high.
• The recent Aussie dollar weakness has seen the Singapore unleaded price near four month highs, while the wholesale (terminal gate) price has hit three month highs. Over the next fortnight CommSec expects pump prices to breach a $1.25 litre and rise by 2-3 cents a litre.
• Mobile phone shipments (in effect, sales) sales have surged due to seasonality factors. However a more smooth measure of activity would be a comparison of mobile phone shipments with the same period last year, which shows sales are down 6.5 per cent on a year earlier.

What does it all mean?

• Petrol prices have risen for the second straight week, and are now holding at a three-month high. And there is unlikely to be much good news for motorists in the near term, especially given that the regional oil prices have also reached multi-month highs.
• The recent weakness of the Australian dollar has far outpaced the falls in the Singapore unleaded price. And as a result the Singapore unleaded fuel is trading at near four month highs in Australian dollar terms. Already the higher regional petrol price is starting to filter through domestically, with the wholesale (terminal gate) price rising to three month highs in the past week.
• CommSec expects petrol prices to move higher with the national average price breaching a $1.25 a litre in the next fortnight.
• The data on mobile phone sales is one of the timeliest readings on consumer spending. And given that mobile phones are still a ‘must have’ item, if sales are moving, then it provides a pointer to consumer spending trends.
• Mobile phone sales are largely influenced by seasonal factors, and to get a better reading on trends, CommSec has used a smoothed annual measure. In the three months to October, phone sales have fallen by just over 6 per cent compared with the same period a year ago – a result that highlights that despite confidence levels remaining high, consumers are still displaying conservative attitudes when it comes to spending.
• However when closer attention is paid to the single monthly result mobile phone sales are up 13 per cent compared with October of last year. And while the rise is largely due to seasonality factors, the pickup on the same period last year is encouraging. The sustained improvement in labour market conditions, pick up in equity markets, and rising wealth levels should support consumer activity in the midterm.
• What is required in coming months is a period of interest rate stability to allow consumers and businesses to the higher borrowing costs and in time lift spending patterns.

What do the figures show?

Petrol prices:

• According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol rose by 0.5 cents per litre to 124.3 cents a litre in the week to November 21. The metropolitan price rose by 0.2 c/l to 123.9 c/l, while the regional average price rose by 1.1 c/l to 125.0 c/l.
• Petrol prices across states in the past week were: Sydney (down 0.8 cents to 123.2 c/l), Melbourne (up 0.1 cents to 124.0 c/l), Brisbane (up 1.0 cents to 126.5 c/l), Adelaide (up 1.1 cents to 123.2 c/l), Perth (up 2.6 cents to 122.9 c/l), Darwin (down 0.2 cents to 127.2 c/l), Canberra (down 2.6 cents to 122.2 c/l) and Hobart (down 0.8 cents to 128.0 c/l).
• The national average wholesale (terminal gate) hit an 11-month low of 111.6 cents a litre on October 1. However the terminal gate price has since risen to a three month high of 117.3 cents today. The key Singapore unleaded petrol price rose by US40c (0.4 per cent) to US$93.60 last week. And in Australian dollar terms Singapore gasoline rose by $1.15 (1.2 per cent) over the week to $94.96 a barrel – a near four month high.

Mobile phone shipments:

• Mobile phone shipments: The Australian Mobile Telecommunications Association has reported that 1,077,307 mobile phones were shipped to stores in October (in effect, mobile phone sales), a sharp rise on October sales.
• A more smooth measure of activity would be a comparison of mobile phone shipments with the same period last year. In the three months to October, phone sales have fallen by almost 6.5 per cent on the same period a year earlier.
• After peaking with annual sales of just over 10 million units in the year to May 2008, mobile phone sales have retreated to an annual rate of just under 8.5 million units in October 2010. The annual rate has been averaging close to nine million mobile phone sales since June 2009.

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. 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.
• The Australian Mobile Telecommunications Association releases data on mobile phone shipments each month. The figures collected for AMTA by Informark record the number of shipments, rather than sales. While figures on handset shipments don’t fully translate to sales, they are nevertheless a useful proxy. The data on mobile phone shipments is a guide to consumer spending.

What are the implications for interest rates and investors?

• The higher regional oil prices are filtering through to domestic wholesale prices, pump prices are likely to lift in the near term. Motorists are likely to see petrol prices rise by 2-3 cents a litre over the next fortnight
• The recent interest rate hike is likely to keep domestic activity subdued in the near term. Lending finance is stagnating and a period of interest rate stability will be needed to entice consumers and businesses to increase borrowing levels and in turn boost activity.

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• The Australian Institute of Petroleum reports that the average Australian petrol price fell by 2.2 cents last week. Over the past fortnight prices have fallen by 4.9 cents a litre – the biggest fortnightly fall in 21 months. The national pump price is now holding at a near 11-month low of 119.3 cents a litre.
• Total lending (business, housing, personal and lease loans) rose by 5.2 per cent in July all but reversing the previous months loss. Lending continues to track sideways.
• Loans for construction of dwellings (owner-occupier and investor) fell by $31.8 million to $1.69 billion in July – a 17-month low.
• The average credit card balance stood at a $3,267.70 in July, down $15.30 on June. The average credit card balance is up 5.1 per cent on a year earlier – the fastest annual growth in 29 months.

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