The latest car sales figures and the Westpac/Melbourne Institute consumer sentiment survey have underlined the paradox central to the current state of the Australian economy, especially where consumers are concerned.
While retailers large and small have warned of weak sales and consumer interest (The Reject Shop a week ago and Billabong yesterday being the two latest to issue downgrades) car sales and consumer sentiment continue to show resilience in the face of the fallout from the rate rises in November from the RBA and major banks.
And yet the word from retailing is that consumers are not spending heavily (as Harvey Norman has complained) or spending online and offshore (Harvey Norman and Myer) or buying smaller items or essentials less often.
Credit card usage isn’t heavy and in fact consumers are using cash or EFTPOS more and more, or debit cards, to make purchases.
And consumers are saving more and not spending, as comments from the Reserve Bank in the past fortnight confirm.
But far from being shy or retiring, consumers remain pretty upbeat.
For example, the latest Westpac-Melbourne Institute Index of Consumer Sentiment rose by 0.2% in December to 111.0, up from 110.7 in November.
The rise followed the increase in the cash rate from 4.5% to 4.75% by the RBA on November 2 and subsequent mortgage rate increases by the banks that were bigger than the central bank’s 0.25% increase.
And Australian Bureau of Statistics figures yesterday on new car registrations last month showed a rise of 0.2% to a seasonally adjusted 85,583 from October.
After house purchases, buying a car is the next biggest transaction for most consumers and there’s no sign of a downturn.
Sure growth is slowing, compared to the same month last year and from earlier months this year.
But total sales for the year will top the million vehicle mark for only the third time ever, as the industry figures earlier this month suggested.
Commenting on the consumer sentiment figures, Westpac senior economist Matthew Hassan said consumers had shown a "surprisingly resilient reaction to November’s interest rate hikes".
"While off the highs recorded in October and the first few months of the year, the Index remains in solidly optimistic territory comfortably above its long run average," Mr Hassan said.
Among the component indexes, the biggest rises in December were in responses to questions on consumers’ own financial position.
The Index measuring assessments of family finances versus a year ago rose 4.1%, partially reversing the sharp interest rate induced drop in November (10.2%).
The Index measuring expectations for finances over the next 12 months also rose 2.7%.
The only component to register a fall in December was the index measuring consumer expectations for the economy over the next five years.
The index fell by 7.2% to its lowest level since February 2009 and 21% below its December 2009 level – the biggest annual fall since the mid-1990s.
Short-term views on the economy were more resilient, with opinions on the economic outlook over the year ahead up 1% in December and down 2.7% over the year.
The ABS said sales of passenger vehicles increased by 1.1%, while sales of sports utility vehicles decreased by 0.8%.
Over the same period sales of other vehicles decreased by 0.9%.
In seasonally adjusted terms, sales of new motor vehicles decreased in three of the eight states and territories for November 2010 when compared with October 2010.
The Australian Capital Territory recorded the largest percentage decrease of 6.9%, followed by Victoria (1.5%) and Queensland (0.3%).
The largest percentage increase for new motor vehicle sales occurred in Tasmania with a 5% rise.
