A leading indicator for Australian outbound international tourism
Foreseechange has developed leading indicators for household consumption expenditure and retail sales. Now a leading indicator has been developed for outbound international tourism (residents departing for less than 12 months).
The leading indicator model is illustrated in Chart 1.
The model is a good indicator of growth over the ensuing 6 to 8 months. It will be updated in late October 2014, which will provide guidance for growth over the first half of 2015.
The model is based on our proprietary tracking of consumer willingness to spend, shown in Chart 2. It has proven to be a good predictor of consumer spending growth over the following 6 to 8 months. Also included in the model is the Australian dollar exchange rate (trade-weighted index) which also leads international tourism growth by six months.
The leading indicator model picks turning points well. Current research is aimed at identifying other relevant factors.
There are three reasons why the Willingness to Spend measure predicts turning points in consumer spending.
This leading index will be updated in the latest Consumer Pulse + Leading Indicators report which will be available in early November 2014 and can be purchased from foreseechange. It is based on a survey update conducted in October 2014.