Credit card numbers fall for first timeLending; Credit cards; Housing; Business survey; Consumer sentiment
Credit cards: The average credit card balance fell by $15 to a decade low of $3,061.90 in October. The number of credit cards is now falling in annual terms for the first time on record.
Business survey: The NAB business conditions index fell from a 20-year high of +21.1 points to +12.2 points in November. The business confidence index fell from +8.6 points to +6.3 points.
Consumer confidence: The weekly ANZ/Roy Morgan consumer confidence rating fell by 0.6 per cent to 115.1 last week, still well above the long-run monthly average of 112.9.
Lower home prices: The Bureau of Statistics reports that Australian home prices fell by 0.2 per cent in the September quarter to stand 8.3 per cent higher over the year.
More homes: At the end of September there were 40,200 more homes than at the end of June. But the number of NSW homes rose by just 7,600 – the smallest quarterly gain in 3½ years.
Lending finance: Total new lending commitments (housing, personal, commercial and lease finance) fell by 0.8 per cent in October to an 8-month low of $67.8 billion. 
What does it all mean?
Welcome to the age of the ‘new consumer’. The number of credit card accounts is lower than a year ago – the first annual decline recorded. Average credit card debt is the lowest in a decade. Usage of credit card limits is at 19-year lows. But there is record usage of both credit and debit cards.
The Aussie consumer now wants to live within his/her means. People love the flexibility and ease of use of credit and debit cards, but they have grown more wary of piling up the debt. Much is due to Gen Y who shun credit cards in favour of debit cards.
Business conditions apparently eased from 20-year highs in November. But survey responses do bounce around from month to month. Still, the smoothed measure of business conditions stands at 9-year highs. Businesses are still in good shape.
What do the figures show?National Australia Bank Business Survey:
The NAB business conditions index fell from a 20-year high of +21.1 points to +12.2 points in November (long-term average +5.3 points). The business confidence index fell from +8.6 points to +6.3 points (long-term average +5.9 points). 
The rolling annual average business conditions index was at a 9 ½-year high of +14.7 points in November.
The survey was conducted from November 20-26.
Components: the index of trading conditions fell from +29.5 points to +16.2 points; employment eased from +7.1 points to +6.8 points; profitability eased from +26.0 points to +14.5 points; forward orders rose from +2.7 points to +6.0 points.
Inflationary indicators were mixed in November. The monthly reading of labour costs rose at a 1.2 per cent quarterly rate in November after a 0.8 per cent rise in October. Purchase costs rose at a 0.7 per cent quarterly rate in November after a 0.5 per cent increase in October. Final product prices were up by 0.3 per cent in November, after a 0.4 per cent increase in October. Retail prices rose at a 0.2 per cent quarterly rate in November after a 0.2 per cent increase in October.
Capacity utilisation was steady at 81.7 per cent in November, and was above the long-term average of 81.1.
The proportion of firms reporting that they did not require credit fell from 77 per cent to 45 per cent in November.
NAB said: “The fall in business conditions during November was relatively broad-based across industries, with construction recording the only increase. Despite the falls, all industries outside of retail are still seeing quite elevated levels of conditions. The construction industry is performing incredibly well  (+22 index point, in trend terms), thanks to support from both a large pipeline of residential construction and a likely improvement in nonresidential construction activity. Meanwhile, given some of the disappointing reads on consumer spending of late, it is no real surprise that retail conditions continues to languish in negative territory (-2 in trend terms).
“Business confidence has remained in positive territory across all industries in November, however, we are seeing a clear downward trend in confidence at the aggregate level. Construction, manufacturing and transport appear to be the major drivers behind the moderation, although confidence in each of these sectors remains fairly elevated in trend terms. In contrast, confidence in the mining industry appears to have gone from strength to strength, which could be interesting in terms of the implications for future capex. Confidence is currently the weakest for personal services in trend terms (+4), but strongest in mining (+23).” Lending Finance:
Total new lending commitments (housing, personal, commercial and lease finance) fell by 0.8 per cent in October to an 8-month low of $67.8 billion.
In trend terms, lending fell for the fourth straight month, down by 0.6 per cent in October.
Personal finance commitments rose by 1.6 per cent in October – a sixth consecutive monthly increase. Fixed lending rose by 3.6 per cent in October. Revolving credit was down by 1.9 per cent. Personal loans are still down 3.4 per cent on a year ago.
Within fixed lending, loans to buy blocks of land hit a record $8 billion for the year to October.
All housing finance fell by 0.1 per cent in October with construction and purchases largely flat. Alterations and additions fell 6.2 per cent in October but were up 13.9 per cent over the year. All housing finance is up 3.7 per cent over the year.
Commercial finance fell by 1.6 per cent in October after falling 5.7 per cent in September. Within commercial commitments, fixed lending fell by 0.9 per cent to a 16-month low. Revolving credit fell by 3.8 per cent. Commercial loans are down by 7.3 per cent on a year ago.
Lease finance rose 4.7 per cent in October to stand 23.2 per cent higher over the year.
Credit & debit card lending: 
The average credit card balance fell by $15.00 to a decade low of $3,061.90 in October. In smoothed terms (12 month average) the average balance was down by 0.3 per cent.
Of credit cards attracting interest charges, the average outstanding balance rose by $10.50 in October to $1,891.10. The average balance accruing interest was down by 1.0 per cent on a year ago. In smoothed terms (12 month average) the average balance was down by 1.9 per cent on a year ago.
The average credit card limit rose by $16 to $9,128.60 in October to be up 0.8 per cent over the year.
Usage of credit card limits stood at just 33.5 per cent in September – the lowest level in 19 years.
The number of credit card accounts stood at 16,724,000 in October, down 0.1 per cent on a year ago – the first annual decline in the 23-year history.
Consumer sentiment
The weekly ANZ/Roy Morgan consumer confidence rating fell by 0.6 per cent to 115.1 last week. Confidence remains above the average of 113.2 since 2014 and above the long-run monthly average of 112.9 since 1990.
Three 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 +5.9 to +3.0;
• The estimate of family finances over the next year was down from +27.1 to 23.5;
• Economic conditions over the next 12 months was up from +4.7 to +5.6;
• Economic conditions over the next 5 years was up from +8.5 to +9.4;
• The measure of whether it was a good time to buy a major household item was up from +32.9 to an 11-weekhigh of +34.3.
The measure of inflation expectations 2-years ahead was steady at 4.5 per cent.
Residential property prices
The Bureau of Statistics (ABS) has released its Residential Property Price indexes.
“The price index for residential properties for the weighted average of the eight capital cities fell 0.2 per cent in the September quarter 2017. The index rose 8.3 per cent through the year to the September quarter 2017.
“The capital city residential property price indexes fell in Sydney (-1.4 per cent), Perth (-1.0 per cent), Darwin (-2.6 per cent) and Canberra (-0.2 per cent) and rose in Melbourne (+1.1 per cent), Brisbane (+0.7 per cent), Adelaide (+0.7 per cent) and Hobart (+3.4 per cent).
“Annually, residential property prices rose in Hobart (+13.8 per cent), Melbourne (+13.2 per cent), Sydney (+9.4 per cent), Canberra (+6.9 per cent), Adelaide (+4.8 per cent) and Brisbane (+3.5 per cent) and fell in Darwin (-6.3 per cent) and Perth (-2.4 per cent).
“The total value of residential dwellings in Australia was $6,779,325.1m at the end of the September quarter 2017, rising $14,843.2m over the quarter.
The mean price of residential dwellings fell $1,200 to $681,100 and the number of residential dwellings rose by 40,200 to 9,954,100 in the September quarter 2017.”
CommSec estimates that the number of people per home was broadly steady at 2.48 over the September quarter.
The number of homes in NSW rose by just 7,600 in the September quarter – the smallest lift in 3½ years.
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 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 monthly National Australia Bank business survey is valuable in providing a timely reading about 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 (ABS) provides quarterly data on residential prices. The figures provide further perspectives on the state of the housing purchase sector.
What are the implications for interest rates and investors?
In October there were more credit and debit card transactions than ever before – even more than Christmas last year. While the average purchase size is lower, the value of card transactions was still up 10 per cent on a year ago. Consumers are clearly spending – if that wasn’t the case then businesses would be far less positive. We wouldn’t read much into the latest business survey. There is some ‘noise’ in the results, but as the NAB points out, industries are experiencing elevated operating conditions.
CommSec expects rates to remain on hold until late 2018.
Originally published by Craig James, Chief Economist, CommSec