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Economics | June 12, 2020

ATM withdrawals hit 19-year lows due to COVID-19 New home sales plunge; Job ads rebound Credit/debit card lending; Job ads; Regional building approvals; Home sales Card purchases: The value of purchases made with credit and charge cards fell by 19.1 per cent in April,

but were still up 3.7 per cent on a year ago. And the value of debit card purchases fell by 16.1 per cent in April to be down 7.7 per cent on the year. The annual average of ATM (Automatic Teller Machine) withdrawals hit 19-year lows in April at 42.27 million.

Job ads rebound: According to employment website SEEK, new job ads posted on its website between May 25 and June 7, 2020 rose by 60.6 per cent. This compares to rises of 26.8 per cent, 39.7 per cent and 49.2 per cent, respectively in the previous three fortnights.

New detached home sales: In seasonally-adjusted terms, private new detached home sales fell by 4.2 per cent in May. And over the three months to May, sales were down by 20.3 per cent compared to the previous three months. Home sales are also lower in the three months to the end of May than at the same time in 2019 by 18.2 per cent.

Regional building approvals: In the year to March, building approvals were the highest in Melbourne-West (11,462); Melbourne-Inner (8,337) and Melbourne-South East (7,585). The fastest annual growth of home approvals was in Perth-Inner (up 100.4 per cent), followed by Sydney-Inner South West (up 48.8 per cent), Central Queensland (up 38.5 per cent), Newcastle & Lake Macquarie (up 30.7 per cent), Melbourne-Inner (up 21.8 per cent) and Townsville (up 18.4 per cent).

The consumer confidence figures have implications for retailers, and other consumer-focussed businesses. The job advertisements data is a leading indicator of the job market and therefore important for consumer-focussed stocks and companies such as SEEK. The approvals data has implications for banks, retailers, developers, building and building material companies. The home sales data has implications for banks, retailers, developers, building and building material companies.

What does it all mean? The latest Reserve Bank data covering purchases made with credit and debit cards shows the broad impact of

the virus economic lockdown and social distancing measures on economy-wide spending. The value of

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Economic Insights. ATM withdrawals hit 19-year lows due to COVID-19

purchases plummeted by 19.1 per cent in April - the biggest fall on record (14½ years) - with a reduction of card use to purchase goods both domestically and overseas.

With Aussies’ housebound, online shopping increased. But consumers exercised caution with their plastic, given rising job insecurity and economic uncertainty. In fact, the average credit/charge card balance hit a 13-year low of $2,892.80 in April.

With concerns around the health and hygiene of banknotes, Aussies opted for contactless payments rather than cold, hard cash during the pandemic. And most retailers have only accepted cards as a means of payment. In this environment, bank ATMs (Automatic Teller Machines) are being used less and less.

The downturn in the residential building sector continues. COVID-19 restrictions have dampened activity in the housing market. Home prices are easing in Sydney and Melbourne, in particular. Home sales hit record lows in March and have continued to slide in April and May.

It is hoped that a combination of the HomeBuilder package and the re-opening of the economy will stabilise the property market. But high project cancellation rates will adversely impact dwelling starts in the second half of 2020. Lower inbound migration is also likely to affect council building approvals across Australia. An area to watch is Melbourne, which has seen the strongest growth rates in consents over the year to March.

What do the reports and figures show?

Credit and debit card lending - April

The average credit/charge card balance hit a 13-year low of $2,892.80 in April. The average limit was at a record high (highest in 26 years) of $9,909.68. 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 fell by 26.7 per cent in April after declining by 2.4 per cent in March (down 25.5 per cent annual).

The value of purchases made with credit and charge cards fell by 22.6 per cent in April to be down 28.7 per cent on a year ago.

The number of overseas purchases fell by 32.1 per cent in April and were down 46.7 per cent on the year.

The value of domestic purchases was down by 20.6 per cent in April and 25.4 per cent 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 fell by 16.1 per cent in April to be down 7.7 per cent on the year.

By value, the sum of credit & debit card purchases fell by 19.1 per cent in April – the biggest fall on record (14½ years). Card purchases were down by 18.2 cent on the year. Smoothed annual growth (12-month average) fell from 6.1 per cent to 4.1 per cent in April – the slowest rate on record.

The number of credit and charge card accounts stood at an 11-year low in May, down from 14.48 million to 14.33 million.

The number of debit card accounts fell 0.3 per cent to 39.72 million in April. Accounts are up 3.7 per cent on the year.

The number of ATM transactions continues to fall. The annual average of ATM withdrawals hit fresh 19-year lows in April at 42.27 million.

SEEK Employment Trends: May 25 – June 7, 2020

According employment website SEEK, new job ads posted on its website between May 25 and June 7 rose by 60.6 per cent. This compares to rises of 26.8 per cent, 39.7 per cent and 49.2 per cent, respectively in the previous three fortnights.

"This data reaffirms our view that job ad volumes are recovering, although still in the early stages of recovery," SEEK Australia Managing Director Kendra Banks said.

By industry, “The biggest contributors to job ad growth remain unchanged for the second fortnight running. They are Trades & Services, Healthcare & Medical, Hospitality & Tourism, Manufacturing, Transport & Logistics and Education &

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Economic Insights. ATM withdrawals hit 19-year lows due to COVID-19

Training,” according to SEEK.

By region, “Again, all states and territories showed growth in the last two weeks. Tasmania and Queensland are the highest growing states with 86.3 per cent and 82.2 per cent more jobs advertised in the last two weeks compared to April’s average.”

New home sales – May

In seasonally-adjusted terms, private new detached home sales fell by 4.2 per cent in May.

According to the Housing Industry Association (HIA), “Over the three months to May, sales were down by 20.3 per cent compared to the previous three months. Sales are also lower in the three months to the end of May than at the same time in 2019 by 18.2 per cent.”

The Housing Industry Association reported that the volume of detached house sales in the three months to May declined in South Australia (down 31.7 per cent), NSW (down 25.3 per cent), Western Australia and Queensland (both down 19 per cent) and Victoria (down 16.5 per cent).

No data was published by the HIA for multi-unit sales.

Home building approvals - March

Given the size and speed of population growth it makes sense that Melbourne regions dominate home building approvals.

In the year to March, building approvals were the highest in Melbourne-West (11,462); Melbourne-Inner (8,337) and Melbourne-South East (7,585).

Of the ten biggest building regions in Australia, five were in Victoria, three were in NSW and the other two regions were the Gold Coast and the ACT.

In the year to March, the fastest annual growth of home building approvals was in Perth-Inner (up 100.4 per cent), followed by Sydney-Inner South West (up 48.8 per cent), Central Queensland (up 38.5 per cent), Newcastle & Lake Macquarie (up 30.7 per cent), Melbourne-Inner (up 21.8 per cent) and Townsville (up 18.4 per cent).

Further details are on page 4 (below).

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 monthly and fortnightly job advertisements releases are leading employment indicators. Employers only seek additional staff if business activity is strong, and more importantly, if they expect that conditions will remain favourable in coming months. It takes around 5-6 months for the new staff to be added to the payrolls. But a fall in job advertisements would have a more immediate impact on monthly employment estimates.

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 Bureau of Statistics' Building Approvals release contains figures on local council approvals to build residential structures such as homes and units as well as commercial premises such as offices and shops. Approval is one of the first stages of the construction ‘pipeline’ and is thus a key leading indicator of future activity. An increase in approvals would point to stronger future activity for construction-related companies.

What are the implications for investors? Consumer habits continue to evolve. The convenience of ‘Tap-and-Go’ debit cards and Apple Pay smartphone

payments is increasingly preferred by younger Aussies to cash. And ‘buy now, pay later’ options offer younger shoppers greater flexibility around payment plans. While the virus crisis has challenged our need to carry cash, the humble cheque appears closer to extinction following recent Reserve Bank comments on the payments system.

The SEEK job ads data is very promising. Where are vacancies increasing most? Trades & Services; Healthcare & Medical; Hospitality & Tourism; Manufacturing; Transport & Logistics; and Education & Training. Tasmania and Queensland are showing the largest growth in ads.

And SEEK has said that enquiries to buy businesses surged by 50 per cent in May as entrepreneurial Aussies look to take back control of their careers and earning potential.

Ryan Felsman, Senior Economist, CommSec Twitter: @CommSec

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Economic Insights. ATM withdrawals hit 19-year lows due to COVID-19