Low interest rates and $1 billion of lump sum carbon tax compensation payments propelled consumer spending toward a record high at the end of the financial year making June the biggest month for motor vehicle sales in Australian history.
The Federal Chamber of Automotive Industries says an extraordinary 112,722 new vehicles were sold in June, a jump of 17 per cent on the previous June. Although partly driven driven by end of financial year considerations, the surge wasn’t driven by a desire to beat an impending tax change. In fact the change that took place on July 1 will make buying vehicles even more attractive for small businesses, allowing them to claim up to $5000 as an immediate tax deduction.
Sales of sport utility vehicles surged an astounding 46 per cent between the two Junes, climbing from 20,793 to 30,326 meaning one in every four vehicles sold in June was an SUV.
TD Securities economist Alvin Pontoh said the strong first quarter consumption growth recorded in the national accounts appeared to have continued into the second quarter.
“The Reserve Bank’s rate cuts are gaining some traction. The risk that the Bank will ‘wait and see’ before doing more has increased,” he said.
Carbon tax compensation payments totalling $325 million flowed into the bank accounts of families receiving TAx Benefit A and B in March. A further $700 million in payments to pensioners appeared in bank accounts in June.
Bureau of Statistics retail figures released yesterday show a surge of 0.5 per cent in May after increases of 0.9 and 0.1 per cent in March and April. Retail spending is climbing at a trend rate of 0.4 per cent per month, equating to healthy trend growth of 4.3 per cent per year.
Annual spending growth is exceptionally lopsided. Spending grew 10 per cent in Western Australia, 4.3 per cent in Queensland and just 2.2 per cent in the rest of Australia combined. The 2.2 per cent growth rate is below the rate of inflation implying no real growth in the quantity of goods and services sold out outside of the the two large mining states...
Treasurer Wayne Swan said despite the good national result “parts of our retail sector remain under pressure from changing consumer preferences and more cautious consumer behaviour”.
At one end of the spectrum trend spending on household goods is slipping a that rate of 0.1 per cent per month, despite encouraging signs in May. At the other end of the spectrum spending at cafes and restaurants and on takeaway food is exploding at the trend rate of 1 per cent per month.
Spending in Victoria is scarcely growing, inching ahead at the trend rate of 0.1 per cent per month. NSW spending is climbing at a trend rate of 0.5 per cent per month.
In today's Sydney Morning Herald and Age
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