• Australia’s population grew by 345,500 people over the year to September. Population growth increased by 1.57 per cent over the past year – the weakest growth rate in four year and well below the 40-years highs reached in the year to March 2009.
• A total of 185,800 people migrated to Australia over the year to September – marking the weakest result in just shy of four year and a slide of 41 per cent on migration growth pre-GFC (December 2008).
• There were 301,500 babies born in the year to September – holding just shy of the highest reading since quarterly records began 28 years (303,500 – March 2010).
• Across the state and territories, it was the mining states of Western Australia and Queensland that recorded the fastest annual population growth rates – a trend that is likely to gain traction in coming years.

What does it all mean?

• Australia’s population growth rate continues to moderate, easing further away from the 40-years highs reached 18 months ago. And the blame can be placed squarely on slide in migration that has occurred in the past year. In fact, a record 102,200 less people called Australia home over the past year, robbing the economy of momentum at an important time and keeping job markets tight.
• It is understandable that migration levels came off the boil during the global financial crisis. A similar result took place in previous downturns, and has largely to do with the uncertainty surrounding job prospects during a downturn. However Federal policy makers need to also take some of the blame. Migration targets were cut and while they are being slowly reinstated the slide in migration is still being felt.
• Contrary to popular belief it isn’t just skills shortages in the mining sector that is driving the demand for additional workers. In fact the Department of Immigration’s occupational shortages list, highlights that a whole manner of workers are needed from Engineers, Accountants, IT experts, Pharmacists, Dentists, Nurses and Doctors. Interestingly the demand for medical related professions makes up a significant proportion of that list. And given that Australia’s population is still growing and at the same time it is an aging population the demand for medical related skills will continue to gain traction.

• The Reserve Bank believes that a pickup in skilled migration will be the key to ensuring that Australia continues to have a relatively balanced job market. But given the rebuilding that is currently underway in flood damaged towns, and the anticipated pickup in economic growth the risks are clearly around a sustained slide in unemployment over the coming year.
• The Federal government certainly has a role in controlling migrant inflows, however further liaisons with businesses will be important in judging the scope and depth of the labour shortage over the coming year. Proactively raising migration targets will also ensure that there isn’t exacerbating tightness in the job market in the years to come. And ensure that the Reserve Bank will have one less thing to worry about in terms of wage growth pushing up inflation and in turn adding further upward pressure to interest rates.
• It can’t be stressed enough that Australia’s strong migration levels is a big deal. Not just in boosting economic growth in the short-term but also in addressing the longer-term implications of Australia’s ageing population. Rising population growth hasn’t resulted in higher unemployment, rather it’s been instrumental in driving economic growth and contributing to firmer job markets.
• Overall population growth of 1.57 per cent is still healthy. Interestingly the result is being driven by the current baby boom that is taking place. Economic prosperity – low unemployment, rising incomes and greater prosperity have prompted more couples to start families. In fact in the past year more than 300,000 babies were born – holding near the highest reading in records going back 28 years.

What do the figures show?

Population Statistics:

• Australia’s population expanded by 345,500 people over the 12 months to 22,407,700 people. Overall, Australia’s population grew by 1.57 per cent over past year, easing further away from the 40 year record pace of 2.16 per cent recorded in the year to March 2009.
• A total of 185,800 people migrated to Australia over the year to September – falling further away from the biggest annual total since European settlement which was recorded in the year to December 2008 (315,700). An additional 509 people called Australia home each day over the past year.
• Over the year to September, 56,069 migrants settled in NSW, followed by Victoria (52,334), Queensland (33,827), Western Australia (25,475), South Australia (13,243), ACT (2,101), Tasmania (1,571), and Northern Territory (1,144).
• There were 301,500 babies born in the year to September – just shy of the year to March (303,500) which was the highest reading in records going back 28 years.
• Population growth eased in all states and territories. Over the past year population growth was fastest in Western Australia (2.09 per cent), followed by Queensland (1.85 per cent), ACT (1.70 per cent), Victoria (1.65 per cent), NSW (1.33 per cent), Northern Territory (1.27 per cent), South Australia (1.07 per cent), and Tasmania (0.81 per cent).

What is the importance of the economic data?

• Demographic Statistics are issued by the Bureau of Statistics each quarter. The figures include estimates of births, deaths, in-bound and out-bound migration movements and estimates of population change by State.

What are the implications for interest rates and investors?

• The solid pace of population growth will continue to underpin housing demand. While the sharp lift in the number of births will translate to an increased demand for childcare places over the next five years, and a greater demand for school places over the next 5-20 years.
• Not surprisingly population growth is strongest in the mining states, with Western Australia and Queensland leading the charge. No doubt as the global economic recovery gains traction and mining investment is increased a further demand on labour resources will be required.
• The Reserve Bank is likely to remain on the interest rate sidelines over the next few months, given the near term weakness of the economic data.

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• Employment rose by 24,000 people in January, slightly above forecasts centred on gains of around 15,000 (range from -11,000 to +35,000 jobs). The December result was revised lower to show growth of 1,800 people (previously +2,300). Full-time employment fell by 8,000 in January (December jobs were up by 200) and part-time jobs rose by 32,000 (December jobs rose by 1,600).
• The unemployment rate was unchanged at 5.0 per cent. The participation rate rose from 65.8 per cent to 65.9 per cent. The working age population rose by 19,000.
• Average hours worked fell by 0.8 per cent in December but rose by 2.6 per cent over the year.
• While the overall jobless rate is hovering near 5.0 per cent, the youth jobless rate is stuck above 16 per cent and showing no signs of improvement. In fact employment for the 15-19yrs age group fell by 100 over the past year.
• Employment rose most in Victoria (up 17,800) followed by Western Australia (up 3,200), Tasmania (up 600), ACT (up 500), NSW (up 100). Employment fell 5,100 in Queensland followed by South Australia (down 400) and Northern Territory (down 300).

What does it all mean?

• While the overall performance of the job market has been solid over the past year, the question is whether we are failing our young people. The jobless rate for the 15-19 year age group stood at 17.8 per cent in original terms in January – the highest January reading in eight years. Even for the wider grouping of 15-24 years, the jobless rate was 12.8 per cent in January – the highest January reading in seven years.
• While the seasonally adjusted measure of the youth jobless rate has eased from a high of 17.9 per cent, it appears stuck above 16 per cent and showing no sign of falling in line with the economy-wide unemployment measure
• The Government needs to ensure that our younger workers aren’t being left behind, otherwise that will set up problems in the future. Around one in seven young people are unemployed. If they young unemployed are unsuited for higher education, then every attempt needs to be made to provide them with workplace or vocational training to ensure they can meaningfully contribute to economy over time.

• It’s clear that the job market is as variable as the weather. And of course the weather also had a significant influence on the January jobs figures as well. But reading between the lines it is clear that the soft readings on economic activity are now being reflected in the job market figures. Businesses seem to prefer part-time workers to full-time staff while also cutting back the number of hours of their existing employees. Overall the job market is in reasonable shape, but it is now going sideways. Certainly today’s result accords with the views of the Reserve Bank that the job market isn’t overly tight at present.
• The top line employment result suggests employment remains robust. But delve a little deeper and the latest employment figures loses some of its lustre. Full time employment tracked backwards, after a sedate reading in the prior month. And full-time hours worked slumped by 0.7 per cent. The results are consistent with CommSec’s view that the economy is softer than many believe.
• The economy has softened in the last couple of months. Manufacturing, construction and the services sector are all contracting, while businesses are trimming new orders and profitability is being affected – given the lack of activity. No doubt the softer economy is ensuring that businesses remain cautious and the gains in part time employment adds further weight to that picture. Overall it is unlikely that the Reserve Bank will be pursuing further interest rate rises anytime soon. CommSec expects the next rate hike to be towards midyear.
• The Reserve Bank is also anticipating a softening of conditions in the labour market going forward – in line with the weak growth forecasts for the first half of 2011. In fact the Reserve Bank expects the unemployment rate to only slide by 0.5 per cent over the coming two years. No doubt in the longer term an improvement in productivity is what is needed to ensure that these forecasts are met.
• Even the slide in the growth rate of the working age population is concerning. The working age population grew by 1.93 per cent over the past year – the smallest gain in 45 months. No doubt the fall in migration is a key factor. However more importantly the lower growth rate means that the employment hurdle rate will fall – i.e. fewer jobs have to be created on a monthly basis to ensure the unemployment rate continues to fall.
• It is important to highlight that the data is backward looking, capturing how the economy was tracking around 4-5 months ago. The more forward looking indicators like the job ads series suggest that while employment growth will remain a feature it is likely to be a less robust in the near term.
• There are always plenty of quirks in the data and one of the more notable was the sharp jump in Tasmanian unemployment from 5.1 per cent to 6.4 per cent despite employment rising by 600 workers. Hard to blame the Queensland floods for that.
• The ABS noted: “Due to flooding in Queensland, operational difficulties were experienced in conducting the Labour Force Survey in January 2011. Due to the sample loss noted above, there will be increased volatility in the Queensland estimates, particularly in the original and seasonally adjusted estimates. Given increased volatility, the ABS continues to encourage users to focus on trend estimates in monitoring the underlying level of series.”

What do the figures show?

Labour force

• Employment rose for the eleventh straight month in January, lifting by 24,000 workers. Full-time employment fell by 8,000 after rising by 200 in December. Part-time employment rose by 32,000 after rising by 1,600 in December.
• The annual employment growth rate eased from 3.3 per cent to 3.2 per cent.
• The unemployment rate remained steady at 5.0 per cent. The participation rate rose from 65.8 per cent to 65.9 per cent.

• Average hours worked fell by 0.8 per cent in January but rose by 2.6 per cent over the year.
• Victoria (up 17,800) led the job gains in January, followed by Western Australia (up 3,200), Tasmania (up 600), ACT (up 500), NSW (up 100). Employment fell 5,100 in Queensland followed by South Australia (down 400) and Northern Territory (down 300).
• Across the states and territories unemployment rates in January were: NSW 4.9 per cent (4.6 per cent in December); Victoria 5.1 per cent (4.9 per cent); Queensland 5.6 per cent (6.0 per cent); South Australia 5.3 per cent (5.6 per cent); Western Australia 4.6 per cent (4.4 per cent); Tasmania 6.4 per cent (5.1 per cent); Northern Territory 2.3 per cent (2.4 per cent); ACT 3.4 per cent (3.3 per cent).
• The working age population rose by 19,000 in January after lifting by 19,700 in December. The working age population grew by 1.93 per cent over the past year – the smallest gain in 45 months.

What is the importance of the economic data?

• The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel.
• If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees. If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.

What are the implications for interest rates and investors?

• CommSec expects the jobless rate to ease to around 4.5 per cent over the coming year. But if the Federal Government was to provide a much needed boost to labour supply by lifting the migrant intake and easing work visa restrictions, the job market may not need to tighten as much as expected.
• The Federal Government now needs to give consideration to increasing labour supply (migration) to prevent inflationary pressures from emerging. Looking forward, productivity and migration need to lift to prevent inflationary pressures from developing
• We don’t expect the Reserve Bank to touch official interest rates until at least May 2011.
• It is understandable that employment growth is likely to moderate over the next couple of months. The rapid fire rate hikes and sluggish consumer activity is starting to show cracks in the labour market data. Overall the lack of consumer spending, a consolidating housing market, coupled with sectors like manufacturing, services and construction going backwards will keep businesses on the sidelines.
• We expect the job market to remain relatively healthy particularly in the second half of the year. However the job market may trend sideways for the next couple of months. Our equity media analysts maintain their hold rating on SEEK Limited.

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• The NAB business confidence index rose from -2.7 to +4.0 in January. The business conditions index slumped from +5.8 in December to -5.8 in January. Excluding Queensland the confidence reading rose by 2 points to +3.0, while conditions fell by 10 points to -1.0.
• Forward looking sub-indices remained decidedly weak despite modest improvements. Profits fell sharply, employment recorded a modest fall and the pace of contraction in new orders increased.
• Migration slumps to 34-year low. Net migation (permanent and long-term arrivals less departures) slumped to just 1,650 people in December – the lowest monthly result since June 1976.

What does it all mean?

• The latest NAB business survey reinforces the view that corporate Australia is remaining on the sidelines. The weakness in consumer spending, a slowdown in housing construction, and the multiple interest rate hikes of last year have all taken their toll on business confidence and conditions. Added to this, the devastating floods have robbed businesses of much needed optimism at a time of sluggish activity. In fact business conditions have now fallen to the weakest levels in just shy of two years.
• It’s important to highlight that the survey was conducted from 22 January – 2 February, effectively just under a fortnight after the December survey. And the resulting slide between the two results clearly highlights just how much of a devastating impact the floods have had on business conditions.
• More concerning is the added weakness in forward looking indicators. Business owners continue to trim future orders, while profitability has slumped to the weakest levels in 22 months. Given that retailers are aggressively discounting, borrowing costs are rising, and the higher Aussie dollar is curbing manufacturing exports, it is likely that activity will remain subdued in the near term. The negative momentum is clearly worrying, meaning that the Reserve Bank could face an extended stay on the interest rate sidelines.
• It is not all bad news, especially given that rates are likely to remain on hold over the next couple of months. And once businesses and consumers focus on the rebuilding phase following the floods and cyclone, growth and activity should rebound quite dramatically – as the Reserve Bank pointed out in the Monetary Policy Statement released last week.
• Simply, it doesn’t make sense. The job market is super-tight and employers are crying out for skilled workers. But net migration in December was the lowest in over 34 years. Clearly migration intake targets will needed to be lifted markedly over 2011 if we want to complete all necessary projects – both the rebuilding and repair work in Queensland and Victoria as well as the raft of mining and energy projects. 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?

National Australia Bank Business Survey:

• The National Australia Bank business confidence index rose from -2.7 to +4.0 in January.
• The business conditions index fell from +5.8 to -5.8 in January.
• Excluding Queensland the confidence reading rose by 2 points to +3.0, while conditions fell by 10 points to -1.0.
• The index of trading conditions deteriorated, down from +8.7 to –7.0; profitability recorded a sharp fall from +2.6 to -10.0; employment fell from +5.1 to +0; and forward orders remained weak sliding from -2.6 to -4.8.
• The monthly reading of labour costs rose modestly from 0.8 per cent to 0.9 per cent in January. NAB noted that annual growth of labour costs stands at 3.8 per cent.
• Inflationary pressures are well contained. Retail prices were flat in January after rising at a 0.2 per cent quarterly rate in December. Purchase costs jumped by a 0.8 per cent quarterly rate, however the annual rate of increase edged lower from 2.0 per cent to 1.9 per cent.
• Capacity utilisation eased from 82.3 per cent to 80.5 per cent in January – below the decade average of 81.6 per cent and the weakest reading since September 2009.

Overseas arrivals/departures

• Net permanent and long-term arrivals to Australia fell to 205,900 people in calendar 2010, down 32.2 per cent or 97,730 people on a year ago. Departures from Australia rose by 38,520 while arrivals plunged by 59,210.
• The net number of permanent settlers entering Australia (arrivals less departures) stood at just 1,650 in December – the lowest monthly result in over 34 years.
• Tourist departures rose by 0.2 per cent in December to 603,800 after rising by 0.8 per cent in November. It was the third rise in departures in four months. Departures are up 10.4 per cent on a year ago.
• Tourist arrivals rose by 0.3 per cent in seasonally adjusted terms in December to 505,800 after lifting by 1.1 per cent in November. It was the fourth rise in arrivals in five months. Arrivals are up 4.2 per cent on a year ago.
• In seasonally adjusted the tourism deficit – the gap between departures and arrivals – stood at 98,000 in December, unchanged on November and below the record (34-year history) deficit of 125,900 in June.
• In trend terms, tourism arrivals have risen for the past eight months. Tourism departures fell 0.2 per cent in trend terms in December.

What is the importance of the economic data?

• The monthly National Australia Bank business survey is valuable in providing a timely reading on the health of Corporate Australia. Key indicators of business conditions such as orders, employment, profitability and capacity use are covered together with a gauge on confidence levels.
• 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.

What are the implications for interest rates and investors?

• Looking forward, business confidence and conditions should improve to a modest degree as long as the Reserve Bank remains on the interest rate sidelines.
• The continued easing in migrant numbers must be addressed by 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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The big picture

One of the biggest furphies in 2009 was the claim that Australia had a ‘bubble’ in the housing market. It didn’t and still doesn’t but to some extent you can understand where some commentators were coming from with the claims. In Europe and the US, home prices generally tanked in 2009 but Australian home prices softened, didn’t crash and then began to grow again. The view was that the day of reckoning had merely been delayed.

Where the commentators got it wrong was by glossing over a key fundamental determinant of housing demand – population. In most advanced nations population growth is very modest. In fact in many European economies population is barely growing or is flat. In Japan, the population is actually contracting and in the US, annual population growth is around 1 per cent.

But in Australia, population growth had been steadily lifting since the mid noughties. In June quarter 2004, annual population growth was just 1.2 per cent or an extra 230,000 people. And of that total, migration accounted for an extra 100,000 people.

But those migration levels began to lift markedly over the noughties in response to the PPP policy of Federal Treasury – productivity, participation and population. The PPP strategy is an attempt to soften the blow on the economy from the ageing of the population.

In the year to March 2007, over 200,000 extra migrants came to our shores. And by December 2008 annual migration numbers had lifted to over 300,000 people. Now given that the ‘normal’ number of homes built in Australia each year is around 150,000, a lift in annual migration numbers of around 200,000 would be expected to have a big impact.

And as always appears to be the case, the lift in migration numbers wasn’t universally understood by businesses, government departments and builders. Demand for homes has tended to outpace supply over the past 3-4 years. In late 2007/early 2008 there was double-digit growth in home prices. Demand for homes was temporaily choked off by higher interest rates but at the trough, home prices were down just 2.5 per cent on a year ago.

Home prices returned to double-digit levels in early 2010 in response to lower interest rates but a combination of increased home building (more supply), slower migration and higher interest rates again have caused home prices to soften with annual growth now around 6.5 per cent.

It’s important to note that, despite the ebbs and flows of interest rates and building over time, there is no evidence of a generalised over-supply of homes. In fact in the Sydney market the rental vacancy rate stands at just 1.2 per cent. And affordability? The RP Data/Rismark measure that is well accepted by the Reserve Bank has continued to go sideways over the past six years. Hopefully we will hear a lot less about ‘bubbles’ in 2011.

The week ahead

For those unlucky enough not to be on holidays, there is little economic data to digest in the coming week. In Australia the offerings are confined to population data on Tuesday accompanied on the same day by minutes of the last Reserve Bank Board meeting held a fortnight ago.

In the US there is a bit more to focus on, but all the indicators are congregated on just two days – Wednesday and Thursday.

Turning to Australia first, it is likely that the latest estimates will show a further slowing of population growth. In the March quarter of 2009 Australia’s population was growing at a 2.2 per cent annual rate – the fastest rate in 40 years with both migration and the birth rate boosting the result. But in the latest result for the March quarter of 2010, population growth has slowed to 1.84 per cent – still above the longer-term average but clearly a softer result.

The slowdown in population growth is due entirely to a reduction in migration. When the job market weakened over 2009, the Federal Government thought it would be appropriate to cut back migrant numbers. However the softer job market was very much a temporary situation. Now businesses are crying out for staff but the government has been slow to respond by allowing migration levels to rise. Clearly this is a situation that must be addressed over the next few months otherwise it risks a marked tightening in the job market, forcing up wages, prices and interest rates.

Hopefully the release of the June quarter population figures on Tuesday will revive the debate on migration and population growth rates. It is very much in Australia’s short and longer-term interest to have a well balanced labour market.

The other event of note in the coming week is the minutes of the December 7 Reserve Bank Board meeting. As widely expected, the Reserve Bank left rates on hold at that meeting. This was well flagged by the Reserve Bank Governor and he also provided guidance that the next move in rates wouldn’t occur any time soon. Clearly investors will be looking for further guidance in the Board minutes. Investors will also be seeking to identify the ‘hot button’ issues that bear watching. That is, those issues that are in the middle of the Reserve Bank’s radar screen and therefore may be triggers for the next move in rates.

In the US, the main focus is on the housing market. On Wednesday the FHFA home price index is released with data on existing home sales released the same day. Economists expect that home sales rose by more than 5 per cent in October to a 4.7 million annual rate. As always the amount of stock on hand and movement in home prices will also be watched closely.

And on Thursday, economists similarly expect that new home sales recorded a solid lift of almost 7 per cent. Again stock levels and prices will also be in focus. Overall there is evidence that the housing market has found a floor. But with unemployment still high and a significant amount of stock on the market, no one is expecting building activity to lift markedly any time soon.

Also in focus over the week is the final estimate of economic growth for the September quarter. Currently the economy is tracking at a 2.5 per cent annual pace but some economists believe that growth could accelerate to 3.5-4.0 per cent in 2011 given the amount of stimulus being applied to the economy.

The economic growth (GDP) data is due on Wednesday. And on Thursday, orders of durable goods, personal income & spending, weekly jobless claim and consumer sentiment data are all scheduled. Economists tip another solid result for spending, up another 0.4 per cent in November after a similar gain in October. But the measure of business investment – durable goods – may prove soft with most tipping a fall of just under 1 per cent in November.

Sharemarket

While there is still just over a fortnight until the end of the year, it is already clear that Autos & components has been the strongest sector this year (up 62 per cent) but it is dominated by one stock – Fleetwood Corp. Next best has been Pharmaceuticals and biotech’s (up 10.5 per cent), followed by Materials (up 10.1 per cent). However only six of the 21 sub sectors actually recorded gains over 2010. The weakest performing sector was Consumer durables and apparel (down 19.2 per cent) followed by Retailing and Telecom (both down 18.8 per cent). The insurance sector also took a hit losing 17.3 per cent.
Interest rates, currencies & commodities.

There is still plenty of data to be released over the next two months before the Reserve Bank next meets to decide interest rate settings. Financial market pricing suggests a rate hike in February is pretty much a non event. In fact the pricing for a 25 basis point rate hike is just 7 per cent – which is entirely appropriate. While parts of the economy like mining will do well in 2011, exporters and tourism will continue to do it tough. And then there is the added uncertainty in activity levels given the inherent conservatism being shown by consumers and weakness in business trading conditions. CommSec expects the next rate hike to take place in April with the cash rate lifting to around 5.25-5.50 per cent end of 2011.

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• The job market is tight but permanent settler numbers have plunged. Net permanent and long-term arrivals to Australia hit 4-year lows in the year to October. In October alone, the number of permanent settlers in Australia plunged to 6½ year lows. Businesses are crying out for staff but the Government is failing to open the doors to new migrants.
• The tourism gap has improved. Tourism arrivals have risen for six months in trend terms. Overall it appears that the tourism deficit has stabilised – at least for now.

What does it all mean?

• Businesses are justifiably shaking their heads. Across Australia job markets are tight, with not enough local talent to fill positions. But while companies are crying out for staff, migrant numbers are plunging. Last year there were an extra 325,000 people coming to our shores to fill empty positions, but this year net entrants are closer to 210,000.
• Certainly it’s not just the fact that in-bound migrant numbers have been cut back, it’s also the fact that more Australians are looking at opportunities abroad. But clearly that is a situation that government needs to keep on top of. Most recruitment agencies that the main constraint they face at present is lack of candidates.
• If the Federal government believes it has a role in controlling migrant inflows, it needs to ensure that it isn’t exacerbating tightness in the job market. It is in the interests of all Australians to have a balanced job market. The last thing anyone wants to see is the Reserve Bank keeping interest rates at higher levels than they should be because restrictions on migrant inflows are pushing up wages and prices.
• Over the past year, the annual number of migrants has plunged by a record 35 per cent, robbing the economy of momentum at an important time and keeping job markets tight.
• The latest data shows that the tourism deficit is encouragingly not getting much worse, but unfortunately it’s not getting much better either. Tourism operators will have to continue to work hard to keep their heads above water. In talk of a two-speed economy, clearly mining and tourism are the two sectors that first come to mind.

What do the figures show?

Overseas arrivals/departures

• Net permanent and long-term arrivals to Australia fell to 210,420 people in the year to October, down a record 35.2 per cent or 114,300 people on a year ago. Departures from Australia rose by 43,500 while arrivals plunged by 70,800.
• The number of permanent settlers entering Australia in October stood at 9,370 – the lowest monthly total in 6½ years.
• Tourist departures fell by 1.4 per cent in October to 598,400 after rising by 1.9 per cent in September and falling by 1.1 per cent in August. Tourist arrivals fell by 2.3 per cent in seasonally adjusted terms in October to 498,300 after gains of 1.4 per cent in September and 3.6 per cent in August.
• In seasonally adjusted terms the tourism deficit – the gap between arrivals and departures – stood at 100,100 in October, up 3,600 in September but down from the record (34-year history) deficit of 126,300 in June.
• In trend terms, tourism arrivals have risen for the past six months. Tourism departures have risen for the past 17 months in trend terms.

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.

What are the implications for interest rates and investors?

• If last year over 300,000 more foreigners came to our shores for work and this year it’s closer to 200,000, clearly this will have an impact on housing demand and spending. The record drop in migrant numbers is one of the reasons that the economy barely grew over the last quarter.
• Each month there are over 100,000 more Aussies travelling abroad than foreign tourists coming to our shores. Just like the situation with permanent migration flows, the imbalance in tourism has multiplier effects on the economy. The good news is that the tourism deficit appears to be stabilising.

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• Australia’s population grew by 403,082 people over the year to March. Population growth consolidated,
  increasing by 1.8 per cent over the past year, however continuing to ease from the 40 years highs reached
  in the year to March 2009.
• Not only is Australia experiencing healthy migration levels but also a baby boom. There were 303,500
  babies born in the year to March, – the most since quarterly records began 28 years.
• Across the state and territories, it was the mining states of Western Australia and Queensland that
  recorded the fastest annual population growth rates – a trend that is likely to gain traction in coming
  years. South Australia’s population growth held just shy of the fastest pace since the mid 1970s.

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