My Drum piece today had a look at the most recent new car sales data and paints a bit of a picture about how the economy is going. I think it’s clear we’re not in dire straits, but despite our good employment, inflation and growth figures we’re all a bit worried about things. Perhaps we are too worried, but I think the new car sales data shows that while we probably are lagging behind where we thought the economy would be before the GFC invited us to go 12 rounds.
The trade figures out today show another reason why we are perhaps a bit worried:
The high Dollar and declining commodity prices are a big factor here, and the RBA will like that the dollar and Trade Weighted Index has declined a bit since it dropped the cash rate yesterday:
And now to the graphs from today’s Drum piece:
In seasonally adjusted terms August was the best ever month for car sales, and only the 3rd since January 2008 to beat that months’ totals. The GFC really hit the car industry hard:
The trend from 2000 to 2008 shows just how much the GFC hit the industry:
And if you look at our GDP growth over the same time you see something similar, though not as stark
Recessions take time to recover from – and it is not just about recovering the lost growth of that one or two quarters of decline, it is catching back up to where things could have been. In the 1990s that took a long time – 1 year of negative growth, took 7 years to repair:
Back in the car industry the one segment doing ok is the SUV’s which is a bit odd given they have a significant amount of which are considered “luxury”. It perhaps reinforces the view that some are doing better than others in the “recovery”:
This graph, using Jan 2008 as a base shows just how much better the SUV market has been going compared to the rest. The sales of SUVs in August was over 40% above what it was in Jan 2008; sales of passenger cars however were more than 10% below.
You can see how passenger vehicles have declined in importance, and also why you now see a lot more SUVs than you used to:
Not surprisingly sales of new cars mimic the 2 speed economy – with WA and QLD doing better than the rest, and poor old Tasmania, struggling along at the back of the pack:
And perhaps also not surprisingly, total sales of new cars has finally reached pre-GFC levels at the same time that the share of total factor income going to the compensation of employees has also returned to pre-GFC levels.