Kochie’s Weekly Market Update: Economic trends, unemployment rate and the fall of credit cards
Hey gang, get up to speed on this week’s financial trends with my market updates.
– the unemployment rate rose from 5.2 to 5.3 per cent in October.
– for the first time in 17 months employment dropped… by 19,000 jobs in October after lifting by 12,500 in September. Full-time jobs fell by 10,300 with part-time jobs down by 8,700. According to Commsec, economists had tipped an increase in total jobs of around 15,000.
– the average hours worked and the participation rate also fell.
– unemployment across states in October: NSW 4.8 per cent (September 4.5 per cent); Victoria 4.8 per cent (4.7 per cent); Queensland 6.5 per cent (6.5 per cent); South Australia 6.2 per cent (6.3 per cent); Western Australia 5.7 per cent (5.7 per cent); Tasmania 5.9 per cent (6.2 per cent). In trend terms, Northern Territory 5.9 per cent (5.7 per cent); ACT 3.3 per cent (3.3 per cent).
From these figures the job market seems to be softening. BUT it is only one month’s figures so I’m going to wait to see whether this is a longer term trend… I’ll keep you posted.
Aussies Switching From Credit Cards to “Buy Now Pay Later”
According to the latest data from the Reserve Bank, Australians seem to be ditching plastic money at a record rate. The number of active credit cards in Australia has dropped to 13.9 million… the lowest it’s been since April 2011.
More than half a million personal credit card accounts dropped off from August to September this year… the biggest monthly drop on record. Compared with one year ago, the numbers have fallen by 6.4 per cent, which basically means there are 942,810 fewer personal credit card accounts now than there were in September 2018.
According to comparator site RateCity, they reckon there are 3 reasons for this:
1. A general change in consumer attitude towards credit cards
2. The rise of buy-now-pay-later services like AfterPay and Zip
3. Tighter credit card regulations which stops banks automatically lifting limits.
I would also add the extortionate interest rate credit cards charge on outstanding balances is also a major factor.
Despite record low interest rates, credit card rates have not declined at all. The average interest rate charged by credit cards is still a whopping 17 per cent. It is a disgrace.
More updates this week: