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Record Chinese, American and Indian touristsOverseas arrivals & departures; Skilled job vacancies; Global economy
Tourism: Tourist arrivals fell by 1.2 per cent in February after rising by 2.5 per cent to a record-high 760,300 in January. Arrivals increased by 4.8 per cent in trend terms over the year to February. Departures fell by 2.3 per cent in February after increasing by 2.3 per cent in January. Departures rose by 1.1 per cent in trend terms on a year ago.
Record tourists: A record 1,398,800 Chinese tourists travelled to Australia over the year to February, up by 12.5 per cent over the year. Also, a record-high 802,200 visitors from the US travelled to Australia, up by 10 per cent over the year to February. And a record breaking 311,500 Indian tourists travelled to Australia over the year to February, up by 6.7 per cent.
Skilled job vacancies: The Internet Vacancy Index rose by 0.9 per cent to 87.5 in March in trend terms after increasing by an upwardly-revised 1.2 per cent in February (previously reported +0.6 per cent). The index has risen for 18 consecutive months – the longest period of growth since March 2011. The index has increased by 12.1 per cent over the year to 5½-year highs.
Solid global growth: The International Monetary Fund (IMF) left its forecast for global economic growth unchanged at 3.9 per cent in 2018 and 2019, up from 3.8 per cent in 2017. If realised it would be the fastest pace of growth in seven years. Australia’s economy is forecast to grow by 3 per cent in 2018 (up from 2.9 per cent forecast previously) and 3.1 per cent in 2019.
What does it all mean?
The Aussie tourism boom continues. Record numbers of visitors from China, the US and India came Down Under over the year to February. Tourism is generating income, wealth, jobs and economic activity across the economy. The industry accounts for 10 per cent of Australia’s total exports (in 2016-17). 
A new report from the Tourism and Transport Forum Australia (TFF) has found that visits by tourists are expected to grow by 31 per cent from 2016 to 2026 to 385 million annual visits. And $97.6 billion worth of economic activity is currently generated by the tourism industry, underlying its importance to Australia.
Around 922,100 jobs are supported by Australia’s tourism industry, having a multiplier effect across the economy. For example, the sector generates $61 billion for transport-related industries, like airlines, rental cars and coaches. Tourism spending is expected to grow by 57 per cent to $204 billion between 2016 and 2026, according to the TFF.
The global economy is continuing to grow above its potential growth rate, exhibiting broad-based momentum, even though economic data releases have softened, especially in Europe, in recent months.
The IMF have retained their optimistic view that global growth will increase to seven year highs, if realised, of 3.9 per cent in 2018.
The Fund expects growth in 2019, also of 3.9 per cent, to be the peak of the current cyclical expansion. After 2019, output is projected to decelerate to 3.7 per cent out to 2023.
US tax cuts and fiscal spending are behind upgrades to US economic growth projections, now at 2.9 per cent (previously 2.7 per cent) for 2018. Growth in the Eurozone is expected to benefit from strong domestic demand, increasing by 0.2 percentage points to 2.4 per cent in 2018.
Back home in Australia, the domestic economy is projected by the IMF to pick-up from a growth rate of 2.3 per cent in 2017 to 3 per cent in 2018 and 3.1 per cent in 2019. The key drivers will be non-mining investment, government spending on infrastructure and a pick-up in LNG exports.
Expected robust emerging market Asian GDP growth – especially in China (6.6 per cent in 2018) and India (7.4 per cent in 2018) – also implies strong external demand for Australian commodity exports, such as iron ore, coal, metals and agricultural goods.
What do the figures show?Overseas arrivals & departures
Tourist arrivals fell by 1.2 per cent in February after rising by 2.5 per cent to a record high 760,300 in January. Arrivals increased by 4.8 per cent in trend terms over the year to February.
Short-term resident returns (Aussies returning from holidays overseas) fell by 2.3 per cent in February after increasing by 2.3 per cent in January. Short-term resident returns rose by 1.1 per cent in trend terms on a year ago.
In February, tourists from Greater China (China and Hong Kong) totalled 144,000 (mainland China 119,700; Hong Kong 24,300), ahead of New Zealand (113,600).
In annual terms, China is the largest source of tourists to Australia. Over the past year a record-high 1,398,800 tourists came to Australia from China, up by 12.5 per cent over the year. Tourists from New Zealand totalled 1,357,100 visitors over the past year, but were up just 0.8 per cent.
A record 311,500 Indian tourists travelled to Australia over the year to February, up by 6.7 per cent.
Over the year to February, the number of US visitors rose by 10 per cent to a record-high 802,200 tourists.
Skilled Vacancies
The Department of Jobs and Small Business Internet Vacancy Index rose by 0.9 per cent to 87.5 in March in trend terms after increasing by an upwardly-revised 1.2 per cent in February (previously reported +0.6 per cent). The index has risen for 18 consecutive months – the longest period of growth since March 2011. The index has increased by 12.1 per cent over the year to 5½-year highs.
Job advertisements rose in seven of the eight occupational groups in March. The largest gains were recorded for Professionals (up by 1.6 per cent), Managers (up by 1.1 per cent), Machinery Operators and Drivers (up by 1.1 per cent), followed by Community and Personal Services Workers (up by 0.8 per cent) and Clerical and Administrative Workers (up by 0.8 per cent). Technicians and Trades Workers (up by 0.1 per cent) and Sales Workers (up by 0.1 per cent) also increased. However, job advertisements fell for Labourers (down by 0.2 per cent).
Over the year to March 2018, job advertisements rose all in eight occupational groups, with the strongest gains recorded for Professionals (up by 16.0 per cent), Technicians and Trades Workers (up by 15.9 per cent) and Managers (up by 14.4 per cent). Ads also increased for Machinery Operators and Drivers (up by 11.0 per cent), Clerical and Administrative Workers (up by 10.5 per cent), Community and Personal Workers (up by 10.0 per cent), Labourers (up by 2.4 per cent) and Sales Workers (up by 0.5 per cent).
Job advertisements rose in six states and territories during March. Victoria (up by 1.5 per cent) recorded the strongest increase, followed by Western Australia (up by 1.2 per cent), New South Wales (up by 0.9 per cent), the ACT (up by 0.5 per cent), Queensland and Tasmania (both up by 0.2 per cent). But job advertisements declined in the Northern Territory (down by 0.4 per cent) and South Australia (down by 0.1 per cent).
Over the year to March 2018, job advertisements increased in all Australian states and territories. Western Australia posted the strongest increase (up by 16.6 per cent), followed by Victoria (up by 16.0 per cent), the Northern Territory (up by 12.1 per cent), ACT (up by 11.1 per cent), NSW (up by 10.5 per cent), Queensland (up by 9.5 per cent). Tasmania (up by 3.5 per cent) and South Australia (up by 0.8 per cent) lagged.
Global economy
The IMF’s World Economic Outlook Update for April 2018 has forecast the following economic growth for 2018 (previous forecasts January 2018):
Global growth unchanged at 3.9 per cent;
* Advanced economies up by 0.2 percentage points to 2.5 per cent;* United States up by 0.2 percentage points to 2.9 per cent;* Euro Area up by 0.2 percentage points to 2.4 per cent;* Germany up by 0.2 percentage points to 2.5 per cent;* Japan unchanged at 1.2 per cent;* UK up by 0.1 percentage point to 1.6 per cent;* Emerging market and developing economies unchanged at 4.9 per cent;* China unchanged at 6.6 per cent;* India unchanged at 7.4 per cent;* Russia unchanged at 1.7 per cent;* Brazil up by 0.4 percentage points to 2.3 per cent.
The IMF projects the Australia economy to grow by 3 per cent in 2018 (up from 2.9 per cent forecast previously) and 3.1 per cent in 2019.
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 Department of Jobs and Small Business releases a monthly Internet Vacancy Index. The index is based on a count of online job advertisements newly lodged on three main job boards (SEEK, CareerOne and Australian JobSearch) during the month. Output includes a time series of vacancies at various level, including at a national, State and IVI regional level, and at an occupational level.
The International Monetary Fund (IMF) releases its World Economic Outlook in January, April, July and October each year. The Fund’s economic growth forecasts are widely observed by economists and market participants. The IMF’s primary purpose is to ensure the stability of the international monetary system – the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other. The Fund’s mandate was updated in 2012 to include all macroeconomic and financial sector issues that bear on global stability.
What are the implications for interest rates and investors?
Tourism is a significant driver of the Australian economy. China and India’s growing middle classes are becoming wealthier and more educated. Travelling Down Under to visit relatives is now within reach.
Australia is seen as an attractive tourism destination given our unique and clean environment, together with our multicultural society. Our proximity to emerging Asia is opening up new airline routes. Qatar Airlines commenced direct flights from Doha to Canberra in February.
And Tourism Australia’s $35 million Crocodile Dundee campaign during the Super Bowl appears to have worked. US tourist numbers reached record highs in February.
Federal Tourism Minister Mr. Steven Ciobo recently said that spending by overseas tourists has broken through $40 billion for the first time in March. Clearly momentum needs to be maintained through spending support in next month’s Budget.
The Australian economy is improving on the back of a positive global growth backdrop. Synchronised growth is occurring for the first time since 2011 and set to continue for the next 12 months or so.
The world is close to peak growth, however. The US expansion is into its ninth year and the Trump Administration’s fiscal stimulus is expected to fade eventually. Central banks are removing liquidity from financial markets and lifting interest rates. China is rebalancing its economy. Trade tensions remain a wildcard.
Leading indicators of Australian jobs growth, such as internet skilled job vacancies, remain very strong. The allimportant employment report is released tomorrow. Can the record run continue? Skilled job shortages are emerging necessary to lift workers’ pay.
CommSec expects official interest rates to remain on hold until at least the December quarter.
Published by Ryan Felsman, Senior Economist, CommSec