Cash-strapped Australians are showing signs they are winding down their spending on the back of slow wages growth and faltering property markets that may force the Reserve Bank into delaying any changes to interest rates.
The RBA board meets today with markets and economists unanimous in believing it will leave official rates steady at 1.5 per cent, where they have been since August 2016.
But expectations on when the Reserve would finally start to lift rates have been drifting as evidence grows consumers are increasingly wary of spending across the nation’s retailers.
It was confirmed yesterday with figures from the Federal Chamber of Automotive Industries showing a sharp fall in car sales through last month.
Sales were 5 per cent lower than a year ago, even though there was an extra day of business this year compared to last year.
Passenger car sales were down 23.6 per cent compared to October last year, only partially offset by a lift in sales of SUVs and light commercials.
Without government purchases, however, all types of vehicles would have been lower than a year ago.
It was the worst October in five years and followed complaints from the sector that shoppers have been caught up in tightening credit standards from banks and pay rises barely in line with inflation.
Analysts believe the slowdown in the property market is hurting confidence across all consumers.
Westpac chief executive Brian Hartzer, announcing a near $8.1 billion profit for the nation’s second biggest bank, said he expected the Reserve Bank to keep rates steady through next year, in part because of static household incomes and the property market.
Another risk is the looming Federal Election, with consumers likely to hold back spending until polling day.
While wages are flatlining, the jobs market has remained strong with unemployment nationally falling to 5 per cent.
The ANZ’s measure of job advertisements, released yesterday, showed a small lift last month in advertising, though total growth has fallen since August.
ANZ’s head of Australian economics David Plank said a further fall in the jobless rate was likely.