Australia | Aug 18 2008
By Chris Shaw
Whether it be the high level of interest rates or petrol prices at around $1.50 per litre there continues to be evidence Australian consumers are pulling in their spending significantly of late. The latest numbers to prove the point is poor mobile phone sales numbers for July.
As CommSec chief equities economist Craig James notes, mobile sales in July were just over 544,000 units, the lowest number of units shipped for 17 months and down almost 24% from this time last year. July was also the second month in a row where total sales on an annualised basis declined.
The result shows just how sharp the recent decline in consumer spending has been in James’s view, as until the middle of the year demand for tech items had been relatively firm and were defying the broader slowdown in consumer spending. According to James, the figures show just how quickly consumers have decided their priority is to get their own finances in order.
The decline also makes some sense from a broader perspective, as James notes there are as yet no signs of any improvement in the rental housing market nationally. July figures showed a vacancy rate in Sydney of just 1.2%, which while off its lows, is still below the 1.4% of July 2007.
While conditions are expected to improve over time, which appears to be the view of state governments given they are doing little to address the issue, James expects demand for accommodation will continue to increase in line with the growth in population. With investors staying away from the property market at present because of high interest rates, there appears little scope for conditions to ease in coming months, with James seeing rents continuing to push higher as a result.