We’re becoming increasingly two-faced in our spending, turning away from shops towards car showrooms and gas-guzzling sports utility vehicles.
The latest retail figures show with the pre-July carbon tax compensation payments out of the way we’ve returned to anemic spending growth, lifting the cash we put through shop tills barely enough to keep pace with inflation and population growth.
Retail spending growth returned to its long-term trend of 0.2 per cent per month in August after soaring an exceptional 1.2 per cent in June after bonus payments worth $2.85 billion and then slipping 0.8 per cent in July.
“It’s an insipid pace,” said Westpac economist Matthew Hassan. “Small retailers have borne the brunt with sales falling a further 0.7 per cent in August after 1.4 per cent in July.”
“We’re effectively treading water,” said CommSec economist Savanth Sebastian. “Spending on non-food retailing barely budged in August, climbing just 0.1 per cent.”
Away from the shops car lovers are spending up big. Separately released industry figures show vehicle sales up 9 per cent in the year to September with sports utility vehicles accounting for almost one in every three vehicles sold.
The 28 per cent figure is a record high, well up from last year’s 23 per cent.
By contrast only 0.4 per cent of all cars sold were fuel-efficient hybrids. But the figure is an improvement. Last year it was 0.2 per cent.
Sales of locally made vehicles slid a further 2.8 per cent. Only one in eight cars sold in Australia were Australian made. Holden suffered the biggest loss, with sales in the year to September of only 85,345 - down almost 10,000 from the 95,935 sold in the same period last year...
BIS Shrapnel senior economist Tim Hampton said the news depicted “an economy making progress, but in need of additional stimulus”.
“The Reserve Bank’s rate cut will spur further growth, as will a second cash rate cut, which we expect in November.”
AMP chief economist Shane Oliver said he now expected three more cuts in the Reserve Bank’s cash rate taking it to an all-time low of 2.5 per cent.
“Although it has cut the rate to 3.25 per cent, near its global financial crisis low, the mortgage rates charged by banks are still well above their crisis lows,” he said.
“To achieve 6 per cent mortgage rates the cash rate will need to fall to around 2.5 per cent. I expect another cut next month on Melbourne Cup day followed by a cut early next year.”
In today's Age
HOW WE DRIVE NOW
Total cars sold year to date: 822,674
Sports Utility Vehicles: 228,995 (28%)
Fuel efficient Hybrids: 3,371 (0.4%)
Federal Chamber of Automotive Industries
. July: Stimulus sugar-hit over, we're feeling weak
. June: Stimulus payments stimulate so we're spending big
. May: Suddenly we're buying cars big-time, and starting to shop