Petrol prices set to ease from 11-month high

Record home lending, Job ads lift for 8 months
Petrol Prices; Job ads; Lending Indicators; Used car prices, Inflation; Bank notes

• Fuel prices: The national average price of unleaded petrol rose by 0.7 cents a litre last week to an 11-month high of 134.7 cents a litre according to the Australian Institute of Petroleum. But petrol prices are now easing in Sydney, Melbourne and Brisbane due to retail fuel discounting cycles.

• Job ads: ANZ job advertisements rose by 2.3 per cent in January to 161,582 available positions. Ads have lifted for eight successive months to be up 5.3 per cent from a year ago.

• Home loans: The value of new loan commitments for housing rose by 8.6 per cent in December. Owner-occupier loans were up 8.7 per cent to a record high $19.94 billion. And investor loans were up by 8.2 per cent to 2½-year highs of $6.07 billion. Renovation loans rose to 3-year highs.

• Used car prices: According to Datium Insights, used vehicle prices fell 0.7 per cent last week.

• Melbourne Institute inflation gauge: The headline measure rose 0.2 per cent in January to be up 1.5 per cent on a year ago. The trimmed mean gauge rose 0.2 per cent to also be up 0.2 per cent on a year ago.

• The value of banknotes in circulation stood at $98.1 billion in December, up 17.8 per cent on a year ago – the fastest annual growth in almost 19 years.

Movements in the petrol price can affect consumer spending, and in turn, prospects for retailers. Used car price data is useful in gauging activity levels in the motor vehicle market. Job ads/vacancies are an important gauge on the direction of consumer spending. Lending finance data has implications for banks, retailers, developers, building and building material companies. The inflation gauge estimates month-to-month price movements for a wide-ranging basket of goods and services.

What does it all mean?

• Aussie unleaded petrol prices hit 11-month highs last week. But East Coast pump prices are easing after peaking at average prices of between $1.46 and $1.52 a litre on January 23. Why? The discounting phase of the retail fuel cycle has commenced in Brisbane, Sydney and Melbourne with average prices down by 7-14 cents a litre. Today, pump prices are averaging between $1.37 and $1.41 a litre across Australia’s most populous cities. So motorists should top up or hold off filling up their tanks as prices will fall further over the coming week.

• Record low mortgage rates and HomeBuilder stimulus are driving up home prices and leading to record demand for home loans. In fact the value of new home loans for owner occupiers hit a record high $19.9 billion in December with investor home loans reaching 2½-year highs of $6.1 billion. Loans for renovations rose to 3-year highs and new construction financing commitments surged to record highs.

• Job advertisements increased for an eighth successive month in January with ANZ economists reporting that available positions were 5.3 per cent above pre-pandemic levels in February 2019. While encouraging for job seekers, the 2.3 per cent lift in job ads in January was more modest than December’s 8.6 per cent surge in recruitment activity.

What do the figures show?

Weekly petrol prices

• Last week the national average price of unleaded petrol rose by 0.7 cents a litre to an 11-month high of 134.7 cents per litre (c/l) according to the Australian Institute of Petroleum. Metropolitan prices were steady at 138.8 c/l but regional prices rose 2.0 cents to 126.2 c/l.

• Average unleaded petrol prices across states and territories over the past week were: Sydney (up by 1.0 cents to 142.0 c/l), Melbourne (up by 1.3 cents to 146.7 c/l), Brisbane (up by 3.4 cents to 144.0 c/l), Adelaide (down by 16.8 cents to 120.6 c/l), Perth (up by 1.4 cents to 125.4 c/l), Darwin (up by 0.2 cents to 119.4 c/l), Canberra (up by 0.5 cents to 125.9 c/l) and Hobart (up 0.3 cents to 126.1 c/l).

• The smoothed gross retail margin (2-month rolling average) for unleaded petrol rose from 16.01 cents a litre to 16.99 cents per litre (24-month average: 15.2 cents a litre).

• The national average diesel petrol price rose by 1.1 cents to 123.7 cents a litre over the past week. The metropolitan price lifted 1.2 cents to 122.7 cents a litre and the regional price was up 1.0 cent to 124.4 cents a litre.

• Last week, the national average unleaded Terminal Gate Price (TGP) was down by 0.1 cent to 112.3 cents a litre. The terminal gate diesel price was steady at 112.0 cents a litre.

• Today, the average unleaded TGP stands at 112.9 cents a litre, up by 0.6 cents over the week. The terminal gate diesel price stands at 112.0 cents a litre, down 0.2 cents a litre over the week.

• MotorMouth records the following average retail prices for unleaded fuel in capital cities today: Sydney 139.2c/l; Melbourne 141.3c/l; Brisbane 137.0c/l; Adelaide 143.0c/l; Perth 114.2c/l; Hobart 126.1c/l; Darwin 119.7c/l; and Canberra 125.9c/l.

• Last week the key Singapore gasoline price rose by US70 cents or 1.2 per cent to an 11½-month high of US$60.83 a barrel. In Australian dollar terms, the Singapore gasoline price lifted $1.94 or 2.5 per cent to an 11-month high of $79.57 a barrel or 50.04 cents a litre.

Job advertisements – January 2021

• ANZ job advertisements rose by 2.3 per cent in January to 161,582 available positions. Ads have lifted for eight successive months to be up 5.3 per cent from a year ago. Available positions are 5.3 per cent above pre-pandemic levels in February 2020.

• ANZ economists said, “The indicators suggest solid employment gains should continue into H1 2021, and hopefully alleviate the effect of the end of JobKeeper in March, although it will be harder if that support is not replaced by more targeted assistance.”

Weekly used vehicle market

• Datium Insights have reported the following results for the past week:

“Prices were mainly flat the past week (-0.7 per cent).

Supply was down again (-6.1 per cent), highlighting the continued lack of stock.

Clearance rates also fell (-7 per cent).

Prices for the top 15 traded vehicles were mixed with the Toyota Hiace (+5.2 per cent) seeing the largest increase and the Holden Colorado (-3.6 per cent) seeing the largest decrease.”

• In terms of prices, council (-7.2 per cent), corporation (‑5.8 per cent) and finance companies (-4.2 per cent) fell most. But lease companies (+3.5 per cent), light commercial (+2.4 per cent) and SUV (+1.7 per cent) all lifted.

Inflation gauge – January 2021

• The headline measure of the Melbourne Institute inflation gauge rose 0.2 per cent in January to be up 1.5 per cent on a year ago. The trimmed mean measure was up 0.2 per cent in the month to be up 0.2 per cent on a year ago.

Lending – December 2020

• The value of new loan commitments for housing rose by 8.6 per cent in December. Owner-occupier loans were up 8.7 per cent to a record high $19.94 billion. And investor loans were up by 8.2 per cent to 2½-year highs of $6.07 billion. Renovation loans rose to 3-year highs. The table above has details of lending per category.

• The value of owner-occupier first home buyer loan commitments rose by 14.1 per cent to be up 60.6 per cent on the year.

• The seasonally-adjusted value of first home buyer loan commitments accounted for 32.6 per cent of all owner-occupier commitments (excluding refinancing) in December – an 11-year high.

• The number of owner-occupier first home buyer loan commitments increased 9.3 per cent in seasonally adjusted terms to an 11½-year high of 15,205 (42.5 per cent of all loans).

• Personal finance fixed term loan commitments fell by 0.5 per cent in the month to be up 0.1 per cent on a year ago.

• Personal lending from revolving sources (including credit cards) fell by 1.3 per cent in December. Loans were down by 25.4 per cent over the year.

• New finance leases fell by 7.8 per cent in the month. Finance leases were down 4.8 per cent on the year.

• The value of new loan commitments to businesses for construction rose by 109.9 per cent in the month to be down by 28.9 per cent on the year.

• Loans for the purchase of property by business rose by 38.4 per cent to be up by 3.2 per cent over the year.

What is the importance of the economic data?

• Weekly petrol prices data 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 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.

• Data analytics firm, Datium Insights, provides a weekly report on the used vehicle market. The data assists in gauging the strength of a key component of consumer spending and provides insights on the Autos and components sector of the sharemarket.

• The monthly ANZ 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.

• “Lending Indicators” 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.

What are the implications for investors?

• Global oil markets are in a state of flux with resurgent coronavirus cases and lockdowns expected to weigh on activity and crude demand. US oil prices posted the first weekly back-to-back declines since October with the US Nymex price down 0.1 per cent to US$52.20 a barrel. But Brent crude rose by 0.8 per cent to US$55.88 a barrel.

• Major crude producers continue to exhibit supply discipline with Bloomberg reporting that OPEC and its allies estimated they implemented 99 per cent of their agreed oil production cuts in January, supporting oil prices. The alliance’s strategy will be a key focus for energy markets when OPEC’s Joint Ministerial Monitoring Committee meets on Wednesday.

• The downturn in Australia’s housing market has been shallow and brief with home loans at record highs, home sales at 19-year highs and the annual growth rate in regional home prices at 16-year highs at the end of 2020 and beginning of 2021. Rock-bottom mortgage rates and government stimulus are supportive of home price gains in 2021 with a brighter outlook for residential construction and investment. But policymakers may become unnerved by skyrocketing mortgage debt and a potential building boom at a time when population growth is slowing sharply.