Credit card activity sinks again


Westpac’s credit card tracker is not improving:

The Westpac Card Tracker Index* continues to warn of a renewed weakening in consumer demand. While the index held steady at 132.8 over the first two weeks of June it remains materially below the 136.2 average recorded in the March quarter.

If the index continues to hold around current levels over the last two weeks of June it will end up down about 1% for the quarter as a whole. That compares to a 1% gain in the March quarter.

This doesn’t look much like Gotti’s glittering rebound in retail. The tracker is pretty good at nowcasting consumption demand:

The charts shows official estimates of spending have been firmer and less volatile than card activity since the start of last year. Much of the difference appears to relate to tourism spending by Australians abroad. The ABS revised its estimates of this spending up sharply with its Q1 national accounts.

While the card data covers international transactions, some of this tourism spend will be missed if associated payments are made through third parties (e.g. currency exchange providers) and may occur in different periods when payment does not coincide with travel (e.g. prepaid bookings for flights, accommodation, tours etc). 

By category and geographic spread, it is all weak:


By category, travel and durables are the main sources of drag, contributing over 90% of the quarterly contraction in the wider index. At a more detailed level, the first half of June has seen a more pronounced slowing for ‘other durables’, a discretionary category covering clothing, department stores and electrical items.

By state, all are contributing to the contraction nationally. This is mostly in proportion to state size but with the drag from Vic slightly smaller and the drag from Qld slightly larger. However, in level terms, activity remains notably firmer in Qld, WA and SA.

Onwards and downwards for retail!

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.