Australia’s new motor vehicles sales rise in January, likely to remain elevated

Australia’s new motor vehicles sales increased in January following a small rise in the previous month. Sales were up 0.6 percent on a sequential basis, after rising 0.1 percent in December. On a year-on-year basis, new motor vehicles sales dropped 0.9 percent. In spite of the annual drop, sales of new motor vehicle stay at an elevated level, only 2.3 percent lower than the record high seen in March 2016.

In the various segments, a solid rise in sales of new SUVs rose 6.3 percent in the month, whereas passenger vehicles sales dropped 1.7 percent. Meanwhile, ‘other’ vehicles sales, including buses, utes and trucks, fell 4.3 percent in January.

On a year-on-year basis, passenger car sales shrank 1.3 percent, whereas sales of SUV rose 1.8 percent. ‘Other’ vehicles sales dropped 4.7 percent, a huge drop from a rise of 10 percent year-on-year seen in December.

State-wise, results came in mixed throughout different states and territories. Modest annual growth was seen in the ACT, Victoria and to a lesser extent the Northern Territory, Tasmania and NSW. Meanwhile, sales contracted in the resource states of WA, South Australia and Queensland in the year to January.

“We expect new motor vehicle sales to remain elevated, supported by low interest rates and moderate employment growth”, said St George Economics in a research report.

But a more significant rate of growth does not seem to be in prospect while wage growth continues to be weak. A sharp rebound in business conditions in January to above the long-run average should be supportive of sales of ‘other’ vehicles.

At 6:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was slightly bullish at 54.2712, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 15.744. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex