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Petrol prices lift; Lending falls; China slowsWeekly Petrol Prices; Lending finance; China data
Petrol: According to data from the Australian Institute of Petroleum, the national average price of unleaded petrol rose by 4.9 cents last week to 126.1 cents a litre.
Lending finance: Total new lending commitments (housing, personal, commercial and lease finance) fell by 0.7 per cent in November to $69.9 billion. Lending is down 6.5 per cent on the year.
China GDP: The Chinese economy grew at a 6.4 per cent annual rate in the December quarter. The economy grew 6.6 per cent in 2018. 
What does it all mean?
As we warned last week, petrol prices have indeed lifted from recent lows across southern and eastern capital cities, the notable exception being Sydney. Discounting cycles ended last week and pump prices are starting toreflect higher regional and wholesale prices for fuel. Petrol prices are still low when comparing January prices over past years. And while Sydney prices are defying gravity, an end to the discounting cycle is near.
The national wholesale price is around 117 cents a litre, and with longer-term gross retail margins around 11-13 cents, this suggests ‘normal’ pump prices of 125-130 cents a litre.
Consumers and businesses remain debt averse. In trend terms, new loan commitments haven’t budged over the past year. For consumers, loans to buy ‘big ticket’ items like cars and blocks of loans are near 2½-month lows. And loans to buy commercial property are down 13 per cent on a year ago – the biggest fall in a decade.
The China slowdown is not new news. But the key question is what lies ahead, not what is in the past. Authorities are keen to kick start growth through monetary and fiscal stimulus. Also the hope is that the reports of progress in US-China trade talks do actually prove correct.
Ignore the media reports of Chinese economic growth at 28-year lows. The Chinese economy may have slowed, but the bigger story is the maturation of the economy. A more developed global economy could never continue to lift at a 7 per cent plus growth rate. The growth rate will gradually ease further in coming years.
What do the figures show?Petrol prices
According to data from the Australian Institute of Petroleum, the national average price of unleaded petrol rose by 4.9 cents last week to 126.1 cents a litre.
The metropolitan petrol price rose by 7.4 cents to 124.5 cents per litre, and the regional price fell by 0.1 cents to 129.2 cents per litre.
Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 0.3 cents to 113.3 c/l), Melbourne (up by 10.9 cents to 126.1 c/l), Brisbane (up by 15 cents to 130.3 c/l), Adelaide (up by 15.5 cents to 126.4 c/l), Perth (up by 1.3 cents to 126.8 c/l), Darwin (down by 0.6 cents to 129.1 c/l), Canberra (down by 1.0 cents to 143.8 c/l) and Hobart (down by 3.5 cents to 145.4 c/l).
Today, the national average wholesale (terminal gate) unleaded petrol price stands at 117.1 cents a litre, up by 0.4 cents over the week. The terminal gate diesel price stands at 128.4 cents a litre, up by 2.1 cents over thepast week.
The national average diesel petrol price rose by 0.4 cents to 141.3 cents a litre over the week. The metropolitan price rose by 1.2 cents to 139.5 cents a litre with the regional price down by 0.2 cents to 142.8 cents a litre.
Last week, the key Singapore gasoline price fell by US$1.25 or 2 per cent to US$62.65 a barrel. In Australian dollar terms, the Singapore gasoline price fell by $1.41 or 1.6 per cent last week to $87.10 a barrel or 54.78 cents a litre.
MotorMouth records the following average retail prices for capital cities today: Sydney 113.4c; Melbourne 138.1c; Brisbane 138.6c; Adelaide 140.1c; Perth 121.7c; Canberra 143.6c; Darwin 128.5c; Hobart 144.6c.
Lending Finance
Total new lending commitments (housing, personal, commercial and lease finance) fell by 0.7 per cent in November to $69.9 billion. Lending is down 6.5 per cent on the year. But in trend terms, lending was flat in the month to be down 0.2 per cent on the year.
Housing finance: The total value of owner occupied housing commitments excluding alterations and additions fell 1.0 per cent in trend terms, and the seasonally adjusted series fell 1.4 per cent.
Alterations & additions lending rose by 0.4 per cent in November – only the first rise in six months.
Personal finance commitments: The seasonally adjusted series for the value of total personal finance commitments fell 1.7 per cent. Fixed lending commitments fell 2.5 per cent and revolving credit commitments fell 0.1 per cent.
The value of loans to buy new cars fell to 32-month lows of $8.00 billion in rolling annual terms in November. Loans to buy new and used cars are at 30-month lows.
The value of loans to buy residential blocks of land hit 17-month lows of $7.55 billion in rolling annual terms in November.
Commercial finance: The seasonally adjusted series for the value of total commercial finance commitments fell 0.2 per cent. Fixed lending commitments fell 7.3 per cent, while revolving credit commitments rose 27.0 per cent.
Commercial loans to buy real property were down 12.9 per cent on a year ago on a smoothed basis – the biggest decline in a decade.
Lease finance: The trend series for the value of total lease finance commitments fell 1.9 per cent in November 2018 and the seasonally adjusted series fell 2.0 per cent, after a rise of 2.0 per cent in October 2018.
Chinese economic data
The Chinese economy grew at a 6.4 per cent annual pace in the December quarter, the slowest growth since March quarter 2009. In 2018 the economy grew by 6.6 per cent (slowest in 28 years).
Chinese retail sales rose at an 8.2 per cent annual rate in the year to December, (forecast: +8.2 per cent), up from 8.1 per cent in November. Sales grew 9 per cent in 2018 in nominal terms and by 6.8 per cent in real terms.
Chinese industrial production rose at a 5.7 per cent annual rate in December, above the forecast average (+5.3 per cent). Production had risen by 5.4 per cent in the year to November. Production grew 6.2 per cent in 2018.
Chinese fixed-asset investment rose by 5.9 per cent in 2018 (forecast: +6.0 per cent), unchanged from the 11 months to November. Private sector investment grew by 8.7 per cent
Chinese property investment rose by 9.5 per cent in 2018, down from 9.7 per cent in the 11 months to November.
The unemployment rate of urban surveys in 31 major cities was 4.7 per cent at the end of December, unchanged from November.
What is the importance of the economic data?
Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory’s metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.
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.
China’s National Bureau of Statistics releases its monthly economic statistics around mid-month. Quarterly GDP data is released around the 19th of January, April, July and October. China’s Customs Office releases trade data, and the People’s Bank of China releases financial statistics, around the 10th of each month. China is Australia’s largest trading partner and changes in the Chinese economy have major implications for the Aussie economy.
What are the implications for interest rates and investors?
Petrol prices have lifted from recent lows, but they still remain low on an historic basis. Average Australian prices are headed for $1.25-1.30 a litre – levels that shouldn’t play havoc with consumer spending plans. Over the December quarter, petrol prices fell about 3 per cent, thus keeping the headline rate of inflation below 2 per cent.
China is determined to prevent a marked slowing of the economy. It is a case of ‘watch this space’ for signs of how the stimulus efforts are supporting economic growth. In fact there were reasons to be encouraged in the December data with production bettering forecasts. And property investment continues to grow at a near 10 per cent annual pace.
CommSec expects official interest rate settings to remain on hold for the foreseeable future. 
Published by Craig James, Chief Economist, CommSec