Car sales hit record highs; New home sales lift

New home sales; Performance of Services; New vehicle sales

Car sales lifted in September

New home sales rise: New home sales rose by 3.3 per cent in August after slumping by 5.7 per cent in July. Sales of detached houses rose by 0.5 per cent in August and multi-unit sales rose by 19.8 per cent.
Car sales hit record highs. New car sales rose by 2.5 per cent in September compared with a year earlier. A total of 94,978 vehicles were sold in September – the highest reading on record for a September month.
Over the year 345,504 new sports utility vehicles (SUVs or 4WDs) were sold, a record 30.9 per cent of total vehicle sales.
Services activity contracts: The Performance of Services index fell by 4 points to 45.4 in September.

The lift in new home sales activity comes after a slide in the prior month. And while there are signs of a consolidation in housing activity, new home sales are up over 12 per cent on a year ago. Given that council approvals have hit record highs and fixed mortgage rates have been cut by some of the banks, it is clear that homebuilding and home renovations will be the linchpin of the Australian economy growth story over the coming year.
Interestingly the economic momentum is shifting from resource states and territories to those regions where home construction is rising fastest – such as NSW. The Reserve Bank would be more comfortable with the lift in new home sales and strength in home building and it is unlikely to look to shift interest rate settings any time soon.
The industry body representing the car industry has released the latest new car sales data and it was certainly a positive surprise. Not only were car sales up 2.5 per cent in September on a year ago, but a total of 94,798 new vehicles were sold – a record for a September month. Improved job security and the best car affordability since the 1970s are all serving to boost new vehicle sales.
The star performer continues to be sports utility vehicles (SUVs). Sales of SUVs were up almost 15 per cent on a year ago and now make up a record 30.9 per cent of total vehicle sales. In effect one in every three vehicles sold is a SUV.

New home sales rose by 3.3 per cent in August, after falling by 5.7 per cent in July. Apartment sales rose by 19.8 per cent while detached house sales rose by 0.5 per cent.
In August 2014 seasonally adjusted detached house sales increased by 11.1 per cent in New South Wales and by 2.0 per cent in Western Australia. Detached house sales fell by 6.8 per cent in South Australia, 6.0 per cent in Victoria and 0.7 per cent in Queensland.

According to the Federal Chamber of Automotive Industries (FCAI), new car sales rose by 2.5 per cent over the year to September 2014. In September, 94,978 new vehicles were sold. And over the year to September, 1,119,236 vehicles were sold, down further from the record 1,141,483 new vehicles sold on the year to July 2013.
Passenger car sales fell by 4.1 per cent over the year, sports utility vehicles were up by 14.6 per cent and “other” vehicles sales were up by 2.3 per cent. In the year to September 345,504 SUVs were sold, a record 30.9 per cent of total vehicle sales. Of total car and SUV sales, SUVs accounted for a record 38.8 per cent of the total.

The PSI index fell by 4.0 points to 45.4 in September. A reading below 50 points indicates contraction of the services sector. All components fell in September except employment, selling prices and capacity utilisation.
The Housing Industry Association releases data on the sales of new homes each month. The HIA collects the data each month from a sample of Australia’s largest 100 home builders. The survey covers around 14 per cent of the home building industry.
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.
The Performance of Services index is released by Australian Industry Group each month. The PSI is designed to provide a guide to conditions in retail, financial and other service sectors.
The economy continues to gain momentum after a pause around Budget time. Given strong car affordability and better consumer confidence levels, demand for cars should remain healthy, supporting a raft of businesses.
The ongoing lift in new home sales and housing construction will support broader growth and employment. Over the next few months the job market data is taking on a higher degree of importance. Once the Reserve Bank is confident that unemployment has peaked, it will be more inclined to start the ‘normalisation’ of interest rates.

The Housing Industry Association releases data on the sales of new homes each month. The HIA collects the data each month from a sample of Australia’s largest 100 home builders. The survey covers around 14 per cent of the home building industry.
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.
The Performance of Services index is released by Australian Industry Group each month. The PSI is designed to provide a guide to conditions in retail, financial and other service sectors.

The economy continues to gain momentum after a pause around Budget time. Given strong car affordability and better consumer confidence levels, demand for cars should remain healthy, supporting a raft of businesses.
The ongoing lift in new home sales and housing construction will support broader growth and employment. Over the next few months the job market data is taking on a higher degree of importance. Once the Reserve Bank is confident that unemployment has peaked, it will be more inclined to start the ‘normalisation’ of interest rates.