By Craig James 

A million Chinese tourists: Tourist arrivals from mainland China totalled 1,013,700 in the year to November – the first time annual tourist numbers from the country have breached one million.

Record number of tourists: Tourist arrivals rose by 1.8 per cent to record highs in November. But departures fell by 2.8 per cent from record highs.

Consumer confidence: The weekly ANZ/Roy Morgan consumer confidence rating fell by 1.9 per cent to 114.1 in the week to January 10. Confidence is still up 1.9 per cent over the year.

Credit cards: The average credit card balance rose by $36.90 (1.2 per cent) to $3,120.40 in November. It was the smallest increase for a November month for the past three years. Compared with a year ago, the average credit card balance was down 2.6 per cent.

The credit card figures have implications for finance providers, retailers, and companies dependent on consumer and business spending. The consumer confidence figures have implications for retailers, and other consumer-focussed businesses

What does it all mean?

For the first time, the number of tourists to Australia from mainland China has hit record highs. And with tourist numbers continuing to grow at a 20 per cent plus annual rate, there are more landmark results likely to be recorded over the coming year. Tourists from China and Hong Kong combined exceeded 1.2 million in the past year, closing fast on the 1.3 million visitors from New Zealand.

While some may fret about the slowdown in the Chinese industrial sector, the more forward-thinking analysts are focussing on the boost to Australian retailers from increased spending by Chinese consumers and the growing number of Chinese tourists.

If the latest results hadn’t showed a drop in consumer confidence, you would have worries about the accuracy of the survey. Understandably consumers have become more circumspect in light of a weaker Australian dollar and falls on the sharemarket. Encouragingly consumers still believe that it is a good time to buy a major household item with the latest survey result well above the long-term average.

Aussie consumers continue to keep their debt levels in check. The average credit card balance remains lower than a year ago although consumers continue to use both their credit and debit cards more intensively.

What do the figures show?

Consumer sentiment

The weekly ANZ/Roy Morgan consumer confidence rating fell by 2.2 points (1.9 per cent) to 114.1 in the week to January 10. Confidence is still up 1.9 per cent over the year and above the average of 111.4 since 2014.

One of the five components of the index rose in the latest week:

  • The estimate of family finances compared with a year ago was down from +13 to +2;
  • The estimate of family finances over the next year was down from +24 to +22;
  • Economic conditions over the next 12 months was down from -1 to -2;
  • Economic conditions over the next 5 years was up +7 to +10; and 
  • The measure of whether it was a good time to buy a major household item was down from a six-month high of +39 points to +38 points.

Overseas arrivals & departures

Tourist arrivals rose by 1.8 per cent to record highs in November. But departures fell 2.8 per cent from record highs. Arrivals are up 11.5 per cent on the year with departures up 3.6 per cent.

In November, tourists from greater China (China and Hong Kong) totalled 113,100 (mainland China 93,700, Hong Kong, 19,400), ahead of New Zealand (110,900). Greater China passed NZ for the first time in September.

Over the past year a record 1,013,700 tourists came to Australia from China, up 20.5 per cent over the year. Tourists from China and Hong Kong rose to a record 1,233,700 over the past year, up 17.9 per cent over the year. Tourists from New Zealand totalled 1,302,000 visitors over the past year, but were up just 4.7 per cent.

Over the past year, net permanent and long-term arrivals to Australia totalled 277,600 – the lowest level in eight years (June 2007).

Credit card lending

The average credit card balance rose by $36.90 (1.2 per cent) to $3,120.40 in November. It was the smallest increase for a November month for the past three years. Compared with a year ago, the average credit card balance was down 2.6 per cent. In smoothed terms (12 month average) the average balance was down by 1.2 per cent – the biggest fall in 17 months.

Of credit cards attracting interest charges, the average outstanding balance rose by $24.70 in November to $1,978.00. The average balance accruing interest is down by 4.0 per cent on a year ago. In smoothed terms (12 month average) the average balance was down by 5.4 per cent on a year ago – a 14-month low.

The average credit card limit rose by $1.80 to $9,079.40 in November. The average credit card limit in November was unchanged on a year ago. Usage of credit card limits rose from a 14-year low of 34.4 per cent in October to 34.8 per cent in November.

On average, there were 12.4 transactions made per each credit card account in November, up from 10.9 a year ago. The average value of purchases was $122.54 in November with the rolling annual average down from $131.05 in October to an 11-year low of $129.36 in November.

The number of cash advances recorded a 1.5 per cent annual fall in smoothed (12-month average) terms in November.

Debit card lending & ATMs

The number of debit card accounts rose by 3.4 per cent in the year to November to 41.25 million.

The number of purchases and cash-out transactions made with debit cards in November were up by 12.7 per cent on a year ago. The annual growth rate has averaged 12.1 per cent over the past two years.

On average there were 9.1 transactions made per debit card in November, up from 8.3 a year ago. The average value of a transaction was $52.69 with the rolling annual average at $53.63 – a record (12-year) low.

Transactions at automated teller machines in November were down by 6.8 per cent on a year ago. In smoothed terms, ATM transactions were 6.2 per cent down on a year ago, just off the biggest decline on record.

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.

The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.

The Australian Bureau of Statistics releases data on overseas arrivals and departures is produced monthly and is an indicator of the health of the tourism sector. The figures are also useful in understanding spending trends and tracking migrant numbers – an indicator with widespread implications for employment, housing and spending.

What are the implications for interest rates and investors?

The lower Aussie dollar is providing a boost to tourist operators and retailers alike. Tourist arrivals are growing at a double-digit annual rate while the number of tourists from China is actually growing at a 20 per cent plus annual rate.

Consumer debt remains out of favour although cards are being actively used. Credit providers clearly have to work hard on their product and service offerings to remain relevant.

Consumers are alert but not alarmed. But ongoing turbulence on financial markets could take their toll on future discretionary spending.