Australians splash out big on autos, keep economy ticking

Cars drive along a main road as a shopper walks across a pedestrian bridge connecting retail stores in central Sydney, Australia, October 27, 2017. REUTERS FILE PHOTO

SYDNEY — Australian auto sales have boasted their best May on record as cashed-up consumers splash out on big-ticket items, a hopeful sign spending had the resilience to weather a COVID-19 lockdown in the state of Victoria.

Some 100,809 new vehicles were sold in May, according to Thursday’s data from the Federal Chamber of Automotive Industries, a rise of 68% on last year during the depths of a pandemic recession.

Leading the pack were the pick-up trucks favored by sole traders taking advantage of generous tax breaks, pointing to another month of robust business investment.

Government data out on Thursday showed shoppers had already been out in force in April. Retail sales climbed 1.1%, from March, putting them a huge 25% higher than last year when much of the economy was in lockdown.

The strength of consumption suggested the economy maintained its momentum from the first quarter when gross domestic product (GDP) grew 1.8% to surpass its pre-pandemic levels.

“A raft of factors are supporting spending from record-low interest rates to excess savings, rising employment, the best job security levels in a decade, healthy confidence and rising wealth,” said CommSec chief economist Craig James.

“Also the ongoing concerns about COVID-19 continue to motivate people to drive themselves from A to B, in preference to taking public transport.”

Sales likely did hit a pothole in recent days as the entire state of Victoria locked down to combat a coronavirus outbreak, effectively shutting in its 6.7 million consumers.

Yet the strength of employment is giving consumers spending power even as wages remain subdued. Some 292,000 new jobs were created in the past six months to hit a record high.

Surging home prices were also boosting household wealth. National home prices climbed 9% in the three months to May, lifting the median value of a house in Sydney by A$1,359 a day.