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Strongest growth of tourism inflows in 14 years

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Published on: Tuesday, July 08, 2014

by Savanth Sebastian - CommSec

  • Mixed tourist arrivals and departures: Tourist arrivals rose by 1.7 per cent in May while departures fell by 4.5 per cent. Trend annual growth in tourist arrivals is the strongest in 14 years.
  • The number of Chinese tourists hit a record high of 761,600 in May, up 11.9 per cent on a year ago. The number of UK permanent settlers fell to an 11½-year low.
  • Hiring again: Job advertisements rose by 4.3 per cent in June after sliding 5.7 per cent in May.

The job ads data has implications for retailers and service sector firms. The tourism data is important for airlines, travel groups, transport companies and retailers.

What does it all mean?

In just under four years, the annual number of Chinese tourists to Australia has doubled. And although the growth rate has slowed a touch in recent months, China will still surpass New Zealand as our primary source of tourists in around four years’ time. The other important development is that overall tourist arrivals are growing at the fastest pace in 14 years – no doubt boosted by the improvement in the global economy, and mildly weaker Aussie dollar.

There are clear signs of improvement in the job market as the economy gathers momentum, underpinned by consumer spending and housing construction. In recent months we have seen a lift in hours worked and a shift from part-time to full-time employment. No doubt the improvement in business conditions and better profitability metrics is giving business more confidence to hire.

The Reserve Bank would be comforted by the lift in job advertisements. However it is still early days in the recovery. And as the Reserve Bank Governor discussed last week the underlying strength in the Australian dollar continues to hamper rebalancing efforts across the broader economy. While rates are on hold and the central bank holds to a neutral setting, it is likely that policymakers will continue to jaw-bone – that is, talk down the Australian dollar.

What do the figures show?

Job Advertisements

Job advertisements rose by 4.3 per cent in June after a 5.7 per cent slide in May. Newspaper advertisements fell by 2.3 per cent in the month, however internet ads rose by 4.5 per cent. In trend terms, ads rose by 0.2 per cent, the eighth straight gain.

Arrivals & departures

The number of people coming to Australia for holidays or business rose by 1.7 per cent in May after rising by 2.2 per cent in April. Arrivals are up 13.6 per cent on a year ago. In trend terms arrivals are up 11.3 per cent on a year ago – the biggest annual gain in 14 years.

In May, 66,700 tourists from China came to Australia, up 3,700 on a year ago. The annual number of Chinese tourists hit a record high of 761,600 in May, up 11.9 per cent on a year ago.

The number of Aussies travelling overseas for holidays or business fell by 4.5 per cent in May after rising by 10.8 per cent in April. Departures are up 3.1 per cent on a year ago.

In seasonally adjusted terms the tourism deficit (departures less arrivals) narrowed from 227,700 to 192,300 in May.

The rolling annual number of net permanent and long-term arrivals to Australia stood at 385,520 in the year to May, down from 386,870 in April and well short of the record high of 416,810 in the year to July 2009.

The actual number of permanent settlers entering Australia stood at 11,590 in May. Over the past year 143,830 people came to Australia as permanent settlers. The annual number of permanent settlers from the UK is at a 11½-year low but settlers from India and China are just below record highs.

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. The figures are also useful in understanding spending trends and tracking migrant numbers – an indicator with widespread implications for employment, housing and spending.

The monthly Job Advertisements release is a leading employment indicator. 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.

What are the implications for interest rates and investors?

Retailers in capital city centres – especially Sydney – would be pleased at the lift in in-bound tourism.

Even if the job market is on the mend, and this is confirmed in data on Thursday, then the Reserve Bank is unlikely to discuss rate hikes. In fact while we are still pencilling a December rate rise, it is looking more likely to take place in the New Year.


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