More SUVs sold than cars: Craig James

More SUVs sold than cars: Craig James
Jonathan ChancellorMarch 5, 2017

GUEST OBSERVER 

In February, more new sports utility vehicles (SUVs) or four-wheel drive vehicles were sold than passenger cars for the first time.

Yes, SUVs have overtaken cars and the gap is likely to grow over time. Buyers are liking the riding position, versatility and fit-out of SUVs and there are now a variety of model sizes to suit all preferences.

  There is a bit of conjecture about which country holds the record for the longest economic expansion. The latest OECD data suggests that Australia already holds the record. The Netherlands had an expansion of 86 quarters (December quarter 1981 to March quarter 2003) while Australia has notched up 102 quarters (September quarter 1991 to December quarter 2016).

The Reserve Bank is unlikely to settle the matter, downplaying the importance of whether Australia has the world’s longest expansion. Still, the bottom line is that the economy is doing well and has done so for quite some time.

Click to enlarge

Consumers are spending, not splurging. But the pace of sales is certainly sustainable. The lift in spending in January of 0.4 per cent matched the average pace over the past six months and this exceeds both the 5-year and decade-average sales growth of 0.3 per cent a month. 

Spending at takeaway food stores continues to be remarkable – up 1.6 percent in January and up 11.9 percent on a year ago. Competition is strong, keeping prices down, and that is causing people to sample the wares of the large range of food outlets. Ann increased range of “healthy choices” is also causing people to try the new offerings.

Job advertisements have been choppy in recent months while employers work out what their labour requirements are likely to be over 2017. Despite a dip in the seasonally adjusted number of job ads, trend growth is still rising and in fact annual trend growth is the best in seven months. The jobless rate looks set to hold between 5.5-6.0 percent.

National retail petrol prices have eased around 6 cents a litre from recent highs, in line with wholesale prices and Asian import prices. The wholesale price is near 116 cents a litre and that should be a guide for motorists to the cheapest prices that may be offered by retailers – usually at the peak of the discounting cycle in southern and eastern capital cities. 

What do the figures show?

Retail trade

Retail trade rose by 0.4 percent in January after falling by 0.1 percent in December. Annual sales growth lifted from 3.0 percent to 3.1 percent (5-year average gain was 4.0 percent)

Non-food retailing rose by 0.6 per cent in January after falling by 0.5 per cent in December. Non-food retail spending is now up 2.9 per cent on a year ago.

Spending rose the most at Electrical and electronic goods retailing (up 2.4 per cent) from Takeaway food services (up 1.6 per cent). Spending fell most at Pharmaceutical, cosmetic and toiletry goods retailing (down 1.4 per cent) from Department stores and Newspaper & book retailing (both down 0.5 per cent).

Spending at takeaway food services was up 11.9 per cent on a year ago.

Click to enlarge

Sales by chain-store retailers and other large retailers rose by 0.8 per cent In January after falling 0.1 per cent
in December. Sales are up 4.2 per cent over the year (5-year average gain was 5.2 per cent).

Sales rose in six of the eight states and territories: NSW (+0.2 per cent), Victoria (+1.1 per cent), Queensland (unchanged), South Australia (+0.6 per cent), Western Australia (+0.3 per cent), Tasmania (+0.4 per cent), Northern Territory (-0.8 per cent), ACT (+1.2 per cent).
Job Advertisements

Job advertisements fell 0.7 per cent in February from 5-year highs to 165,643 ads. Advertisements have been volatile in the past four months. In trend terms, ads rose by 0.4 per cent in the month to be up 6.6 per cent over the year.

New vehicle sales

There were 89,025 new vehicle sales in February, down 7.7 per cent on a year ago (one less selling day in 2017 than 2016). Sports Utility Vehicles (SUV) totalled 35,497 sales during February to record a 39.9 per cent share of total industry sales. Passenger cars totalled 34,740 for a 39.0 per cent share. Light commercials were the third largest segment with an 18.5 per cent share.

State data compared with a year ago: “In percentage terms, Western Australia showed the most marked fall. Its market dropped by 13.7 per cent, or 1,199 vehicle sales, followed by the Northern Territory (-10.7 per cent), South Australia (-10.6 per cent), New South Wales (-7.4 per cent), Victoria (-7.0 per cent) and Queensland (-6.6 per cent). Tasmania (+1.1 per cent) and the ACT (+0.3 per cent) were the only two markets to show an increase.”

Petrol price

According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 2.9 cents to 128.7 cents a litre in the past week. The metropolitan petrol price fell by 3.9 cents to 126.5 cents per litre while the regional price fell by 0.8 cents to 133.2 cents per litre.

Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 3.9 cents to 131.5 c/l), Melbourne (down by 2.1 cents to 120.8 c/l), Brisbane (down by 1.9 cents to 123.2 c/l), Adelaide (down by 12.1 cents to 123.7 c/l), Perth (down by 1.0 cents to 130.6 c/l), Darwin (flat at 139.9 c/l), Canberra (flat at 139.6 c/l) and Hobart (down by 0.2 cents to 143.3 c/l).

The national average Australian price of diesel petrol fell 0.1 cents to 130.6 cents per litre in the week to March 5. The metropolitan price fell 0.2 cents to 130.8 c/l, while the regional average price fell 0.2 cents to 130.3 c/l.

  The national average wholesale (terminal gate) unleaded petrol price fell to an 11-week low of 115.7 cents a litre on Monday, down 0.9 cents a litre over the week. The terminal gate diesel price stands at 115.3 cents a litre, broadly flat over the previous week.

  Last week the key Singapore gasoline price fell by US$3.55 or 5.2 per cent to a 13-week low of US$64.85 a barrel. In Australian dollar terms the Singapore gasoline price fell by $2.88 a barrel or 3.3 per cent to $85.76 a barrel or 53.94 cents a litre.

  MotorMouth records the following retail prices for capital cities today: Sydney 128.6c; Melbourne 119.6c; Brisbane 121.4c; Adelaide 118.7c; Perth 123.3c; Canberra 138.5c; Darwin 138.5c; Hobart 142.6c.

What is the importance of the economic data?

  The Bureau of Statistics’ Retail trade publication contains the most current readings on the performance of consumer spending. The ABS surveys 500 ‘larger businesses’ and 2,750 ‘smaller businesses’. Retail trade covers spending at a broad range of retail outlets but excludes both petrol and motor vehicle sales. A weak retail trade result may point to a slowing economy as well weighing on the share prices of listed retail stocks. But retail trade estimates can’t be assessed in isolation – it is important to look at the influences determining future trends in consumer spending, such as income, employment and confidence levels.

  The monthly Job Advertisements release is a leading employment indicator. Employers only seek additional staff if business activity is strong, and more importantly, if they expect that conditions will remain favourable in coming months. It takes around 5-6 months for the new staff to be added to the payrolls. But a fall in job advertisements would have a more immediate impact on monthly employment estimates.

  Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory's metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.

  The Federal Chamber of Automotive Industries releases estimates of car sales on the third business day of the month. The figures highlight the strength of consumer spending as well as conditions facing auto & components companies.  

What are the implications for interest rates and investors?

The economy is chugging along nicely. Retail spending is growing at a monthly pace just above the long-term average, vehicle sales are healthy and trend growth of job ads has lifted. The Reserve Bank has no reason to lift or cut interest rates.

Petrol prices have retraced from recent highs, and not surprisingly consumer confidence has also lifted – especially the question on family finances.

  The recent falls in petrol prices are positive for retailers – especially discretionary retailers.

  The only thing exercising minds at present is the housing market with conditions varying markedly across the country.

Craig James is the chief economist at CommSec.

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

Editor's Picks

Walkability drives demand at Stones Corner’s latest apartment development, Corner House
Exclusive: Gardner Vaughan smashes Bokarina price record with Bask penthouse sale
First look: MADE Property doubles down in Kirribilli new apartment market
Spyre Group brings successful Queensland blueprint to Melbourne with Hampton Ltd
Saxon Street by Milieu to bring new housing and urban design to Brunswick’s cultural core

Related Projects

16-22 Maud Street, Newstead QLD 4006
16-22 Maud Street, Newstead QLD 4006
16-22 Maud Street, Newstead QLD 4006
Price
Contact agent
35-37 Mount Street, Prahran VIC 3181
35-37 Mount Street, Prahran VIC 3181
35-37 Mount Street, Prahran VIC 3181
Price
Contact agent
118-124 Benelong Road, Cremorne NSW 2090
118-124 Benelong Road, Cremorne NSW 2090
118-124 Benelong Road, Cremorne NSW 2090
Price
Contact agent
118-120 Matthew Flinders Drive, Cooee Bay QLD 4703
118-120 Matthew Flinders Drive, Cooee Bay QLD 4703
118-120 Matthew Flinders Drive, Cooee Bay QLD 4703
Price
Contact agent
26-62 Kinross Road, Thornlands QLD 4164
26-62 Kinross Road, Thornlands QLD 4164
26-62 Kinross Road, Thornlands QLD 4164
Price
Contact agent
9-11 Baroonba Street, Whitebridge NSW 2290
9-11 Baroonba Street, Whitebridge NSW 2290
9-11 Baroonba Street, Whitebridge NSW 2290
Price
Contact agent
18 Ransley Street, Penrith NSW 2750
Perle, East Side Quarter, Penrith - 18 Ransley Street, Penrith
18 Ransley Street, Penrith NSW 2750
Price
Contact agent
Ernest Cavanagh Street, Gungahlin ACT 2912
Raya, Gungahlin - Ernest Cavanagh Street, Gungahlin
Ernest Cavanagh Street, Gungahlin ACT 2912
Price
Contact agent
39 Browning Street, South Brisbane QLD 4101
39-41 Browning Street, South Brisbane - 39 Browning Street, South Brisbane
39 Browning Street, South Brisbane QLD 4101
Price
Contact agent
675 Gardeners Road, Mascot NSW 2020
Kiara North, Mascot - 675 Gardeners Road, Mascot
675 Gardeners Road, Mascot NSW 2020
Price
Contact agent
187 Salvado Road, Jolimont WA 6014
Jolie, Jolimont - 187 Salvado Road, Jolimont
187 Salvado Road, Jolimont WA 6014
Price
Contact agent
47 Maning Avenue, Sandy Bay TAS 7005
Grace Residences - 47 Maning Avenue, Sandy Bay
47 Maning Avenue, Sandy Bay TAS 7005
Price
Contact agent
Cove Lane, Narooma NSW 2546
Cove, Narooma - Cove Lane, Narooma
Cove Lane, Narooma NSW 2546
Price
Contact agent
52-56 Ramsay Street, Five Dock NSW 2046
Ava, Five Dock - 52-56 Ramsay Street, Five Dock
52-56 Ramsay Street, Five Dock NSW 2046
Price
Contact agent
2375 Gold Coast Highway, Mermaid Beach QLD 4218
The Alfred - 2375 Gold Coast Highway, Mermaid Beach
2375 Gold Coast Highway, Mermaid Beach QLD 4218
Price
Contact agent
129-131 Russell Ave, Dolls Point NSW 2219
ALLURE COLLECTION - 129-131 Russell Ave, Dolls Point
129-131 Russell Ave, Dolls Point NSW 2219
Price
Contact agent
62 Constitution Avenue, Parkes ACT 2600
The Eastbourne on Commonwealth Park - 62 Constitution Avenue, Parkes
62 Constitution Avenue, Parkes ACT 2600
Price
Contact agent
155 Old Burleigh Road, Broadbeach QLD 4218
Sandpiper, Broadbeach - 155 Old Burleigh Road, Broadbeach
155 Old Burleigh Road, Broadbeach QLD 4218
Price
Contact agent
33 Vulture Street, West End QLD 4101
33 Vulture Street, West End QLD 4101
33 Vulture Street, West End QLD 4101
Price
Contact agent
19 Governor Terrace, Murarrie QLD 4172
Park Hill Village Collection, Murarrie - 19 Governor Terrace, Murarrie
19 Governor Terrace, Murarrie QLD 4172
Price
Contact agent
122 Marine Parade, Miami QLD 4220
Nalu, Miami - 122 Marine Parade, Miami
122 Marine Parade, Miami QLD 4220
Price
Contact agent
34 Jacaranda Place, Indooroopilly QLD 4068
34 Jacaranda Place, Indooroopilly QLD 4068
34 Jacaranda Place, Indooroopilly QLD 4068
Price
Contact agent
167 Old Burleigh Road, Broadbeach QLD 4218
167 Old Burleigh Road, Broadbeach QLD 4218
167 Old Burleigh Road, Broadbeach QLD 4218
Price
Contact agent
21 Queens Way, Yeerongpilly QLD 4105
Yeerongpilly Green - 21 Queens Way, Yeerongpilly
21 Queens Way, Yeerongpilly QLD 4105
Price
Contact agent
445-449 River St, Ballina NSW 2478
Solhaven - 445-449 River St, Ballina
445-449 River St, Ballina NSW 2478
Price
Contact agent
52 Sunset Boulevard, Surfers Paradise QLD 4217
52 Sunset Boulevard, Surfers Paradise QLD 4217
52 Sunset Boulevard, Surfers Paradise QLD 4217
Price
Contact agent
6 Jack Brabham Drive, Hurstville NSW
Horizon Hurstville - 6 Jack Brabham Drive, Hurstville
6 Jack Brabham Drive, Hurstville NSW
Price
Contact agent
49 Seena Drive, Edgeworth NSW 2285
49 Seena Drive, Edgeworth NSW 2285
49 Seena Drive, Edgeworth NSW 2285
Price
Contact agent
Lot 118 Ocean Steamers Road, Port Adelaide SA 5015
Lot 118 Ocean Steamers Road, Port Adelaide SA 5015
Lot 118 Ocean Steamers Road, Port Adelaide SA 5015
Price
Contact agent
203 Ashmore Road, Benowa QLD 4217
203 Ashmore Road, Benowa QLD 4217
203 Ashmore Road, Benowa QLD 4217
Price
Contact agent
774 Ripley Road, Ripley QLD 4306
774 Ripley Road, Ripley QLD 4306
774 Ripley Road, Ripley QLD 4306
Price
Contact agent
6 Homelea Court, Rivervale WA 6103
6 Homelea Court, Rivervale WA 6103
6 Homelea Court, Rivervale WA 6103
Price
Contact agent
7002 Ripley Road, Ripley QLD 4306
7002 Ripley Road, Ripley QLD 4306
7002 Ripley Road, Ripley QLD 4306
Price
Contact agent
3 Delos Way, Sorrento WA 6020
3 Delos Way, Sorrento WA 6020
3 Delos Way, Sorrento WA 6020
Price
Contact agent
77 Sutton Street, Redcliffe QLD 4020
77 Sutton Street, Redcliffe QLD 4020
77 Sutton Street, Redcliffe QLD 4020
Price
Contact agent
119 Queen Street & 86 King Street, Bendigo VIC 3550
119 Queen Street & 86 King Street, Bendigo VIC 3550
119 Queen Street & 86 King Street, Bendigo VIC 3550
Price
Contact agent
181 Prospect Road, Prospect SA 5082
181 Prospect Road, Prospect SA 5082
181 Prospect Road, Prospect SA 5082
Price
Contact agent
593-595 Albany Highway, Victoria Park WA 6100
593-595 Albany Highway, Victoria Park WA 6100
593-595 Albany Highway, Victoria Park WA 6100
Price
Contact agent
1-28, 40 Civic Way, Rouse Hill NSW 2155
1-28, 40 Civic Way, Rouse Hill NSW 2155
1-28, 40 Civic Way, Rouse Hill NSW 2155
Price
Contact agent
93-97 Bay Street, Brighton VIC 3186
93-97 Bay Street, Brighton VIC 3186
93-97 Bay Street, Brighton VIC 3186
Price
Contact agent
22-38 & 27-31 The Avenue, Coburg VIC 3058
22-38 & 27-31 The Avenue, Coburg VIC 3058
22-38 & 27-31 The Avenue, Coburg VIC 3058
Price
Contact agent
1F Ashline Street, Wollert VIC 3750
1F Ashline Street, Wollert VIC 3750
1F Ashline Street, Wollert VIC 3750
Price
Contact agent
Lots 100 & 900 Kentucky Court, Cockburn Central WA 6164
Lots 100 & 900 Kentucky Court, Cockburn Central WA 6164
Lots 100 & 900 Kentucky Court, Cockburn Central WA 6164
Price
Contact agent
1260-1272 Malvern Road, Malvern VIC 3144
1260-1272 Malvern Road, Malvern VIC 3144
1260-1272 Malvern Road, Malvern VIC 3144
Price
Contact agent
472 Regency Road, Prospect SA 5082
472 Regency Road, Prospect SA 5082
472 Regency Road, Prospect SA 5082
Price
Contact agent
273A Gorge Road, Paradise SA 5075
273 Gorge Road, Paradise SA 5075 - 273A Gorge Road, Paradise
273A Gorge Road, Paradise SA 5075
Price
Contact agent
270 The Esplanade, Miami QLD 4220
270 The Esplanade, Miami QLD 4220
270 The Esplanade, Miami QLD 4220
Price
Contact agent
2 & 6 Austral Parade, East Bunbury WA 6230
2 & 6 Austral Parade, East Bunbury WA 6230
2 & 6 Austral Parade, East Bunbury WA 6230
Price
Contact agent
5 Charles Street, Charlestown NSW 2290
5 Charles Street, Charlestown NSW 2290
5 Charles Street, Charlestown NSW 2290
Price
Contact agent
59 & 69 Merthyr Road, New Farm QLD 4005
59 & 69 Merthyr Road, New Farm QLD 4005
59 & 69 Merthyr Road, New Farm QLD 4005
Price
Contact agent