The Australian economy meltdown continues as consumers are pulling back on spending and credit card usage. Qantas, Coles and The Reject Shop all posted sharp declines in recent sales. The number of Australians saying things will get worse is rising.
Since March 2018, Aussie’s have cut up more than a million credit cards, based on the number of open accounts. All credit card metrics were in negative territory in June, according to analysis firm RAM Research.
Australian Credit Card Debt
Australians owed AU$51.4 billion in June, compared to a revised AU$51.0 billion for May and a revised AU$52.6 billion for June2018, for a YOY (year-on-year) decline of 2.3%, compared to a 2.5% YOY decline the previous month, according to figures released by the Reserve Bank of Australia.
Australians credit card limits also dropped 2.0% YOY in June to AU$149.3 billion, compared to $152.3 billion one-year ago.
The number of credit and charge card accounts dipped 1.8% YOY in June, compared to a 1.4% YOY decline in May. At end of June Australians held 15.77 million credit card accounts, compared to a revised 15.82 million in the prior month, and compared to a revised 16.06 million one-year ago.
Australian Credit Card Spending
The amount of purchases in June dropped sharply (-4.9%) compared to one-year ago. Purchase dollar volume (PDV), or the amount of purchases charged to credit cards, decreased to AU$26.1 billion in June, compared to a revised AU$28.6 billion in May and a revised AU$27.3 billion for June 2018, according to figures compiled by CardData.
Cash dollar volume (CDV), or cash advances taken with a credit card, dropped 19.9% YOY in June, compared to a revised decline of 10.5% YOY decline in May. CDV posted at AU$561 million in June, compared to a revised AU$624 million in May and a revised AU$700 million for June 2018.
Australian Consumer Confidence
The weekly ANZ-Roy Morgan Australian Consumer Confidence index reveals 31% of Australians say they are “better off” in mid-August, compared to 34% in mid-July. About 21% of Aussies say they are “worse off over the same period, compared to 22% in Mid-July. About 36% of Australians say “bad times” lay ahead, compared to 30% one-month ago. ANZ notes improvements in sentiment toward current economic conditions were not strong enough to offset falls in the future sentiment of economic conditions.
Australian Overall Forecast
While Australian benefits somewhat from the escalation in the U.S.-China trade war, Goldman Sachs says GDP growth could be reduced by 50% in a worst-case scenario of China reducing its demand for Australia’s exports.
The overall Australian economy has plunged to its slowest YOY growth since the second half of 2009 as discretionary household spending continues to weaken. The jobless rate hovers around 5%, with slightly more than 500 new jobs were added in June. Australia is largely (60%) a services based economy.
Weak wage growth is a major culprit driving spending and credit card loan growth down. The consensus is Australia is very near a full-blown recession as the RBA is now considering the drastic measure of negative interest rates, like Europe, notes Robert McKinley, Senior Analyst for CardTrak, CardFlash and CardData.
Full Monthly Report on Australia Consumer Credit and Spending from CardData is Available for Immediate Download
Other Related Reports
All Figures Released and Revised as of 08/23/19