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Wednesday, 24 June 2015

7 million visitors and counting

Record visitors

It has often been said that the Aussie dollar needs to decline in order to assist the economy.

This would help to hoist the price of our resources exports, which are often denominated in US dollars, with the coal sector in particular in need of a boost.

Another industry which may be able to get itself off the mat in response to a lower dollar is tourism, and this does appear to be happening.

The impact is actually twofold, with a lower dollar encouraging more visitors (and students) to travel to Australia, and with more Aussies electing to holiday at home.

Lucky 8s - record Chinese visits

The ABS has been playing catch-up lately with regards to its Overseas Arrivals and Departures release figures, and we got the March 2015 edition today.

It was little surprise to see the number of Chinese visitors continuing to shoot the lights out

Perhaps symbollically for the numerologists out there, the rolling annual total of Chinese short term arrivals exploded to 888,000 on a seasonally adjusted basis.

This represents an incredible increase.

888,000 is a figure which has a neat symmetry to it, and perhaps a lucky one for the tourism industry.

With the dollar declining sharply against the greenback, we also played host to a record 563,800 American visitors in the year to March, in a kind of currency-delayed "Oprah effect".

A combination of these drivers thrust annualised short term arrivals into Australia to well beyond 7 million for the first time.

Visiting family and studying

The greatest number of these short term arrivals came for the purposes of a holiday at 3.21 million.

With more than a quarter of Aussies being born overseas and at least a fifth of us having an overseas born parent, it is little surprise to note that a record 1.97 million short term arrivals came Down Under to visit friends and relatives, a figure which has quadrupled over the past quarter of a century.

2014 was a year of scorching growth for Australia's education "export" industry. This has been another favourable impact of the lower dollar, with Chinese students playing a material role here too, of course.

Australia played host to some 590,000 foreign students in 2014, more than a 12 per cent increase on the prior year. Moreover, 2015 is going to shatter all previously held records by a sizeable margin.

In Q1 2015 a massive 147,000 foreign students commenced courses in Australia, smashing all previous benchmarks by a distance, even the sky-high numbers seen at the stimulatory peak of 2009.

Therefore it was unsurprising to note today that the rolling annual number of short term arrivals into Australia for the purposes of education also tipped in at a record high 278,400.

The wrap

My analysis of the international trade figures has shown that tourism services have rebounded nicely - faring considerably better than services as a whole - having previously grappled with a strong dollar over recent years.

With more than 7 million short term arrivals into Australia in the past year, this trend looks set to continue.

The Detailed Labour Force figures last week also revealed that there is unfolding evidence of a rebalance towards other forms of services employment.

That said, consensus seems to hold that the dollar needs to depreciate further in order to have its desired effect.