These four key stories will help you make sense of what’s happening in business, finance, and the economy right now:
- New vehicle sales rose 14.7%.
- Small business index update
- The ACCC issued a power price warning.
- Inflation expectations fall.
Vehicle Sales Rise 14.7% year-on-year as supply shortages ease
Businesses and consumers purchased a record number of new vehicles in July, according to the Federal Chamber of Automotive Industries (FCAI).
Motorists bought 96,859 new vehicles in July, which was 14.7% higher than the year before (84,461) and 4.4% higher than the previous July record (92,754) in 2017.
FCAI Chief Executive Tony Weber said the July 2023 result was an indication that the market was continuing to recover from supply shortages caused by pandemic-era plant shutdowns, microprocessor shortages, and logistics and shipping bottlenecks.
“During the past 12 months, the issue has been securing supply for consumers; however, as these pressures ease, we are starting to see a return to more stable market conditions,” he said.
“Many of these vehicles were ordered several months ago, so it is important to monitor the broader economic conditions through 2023 and their impact on private and business demand.”
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Xero reports food news on sales and payment times
Australian small businesses are proving to be remarkably resilient, judging from a monthly index that uses aggregated data to track the performance of small businesses.
The Xero Small Business Index, which reflects sales, jobs, wages, and payment times, jumped from 129 points in May to 158 points in June, although this was mainly due to the temporary impact of the end of the financial year on payment times.
However, the index did average 120 points per month in the first five months of the year, which was above the 112-point average of the last three months of 2022.
“For small business owners, there is good news in this latest data,” Xero said, pointing to year-on-year increases in sales, moderate growth in wages,s and largely steady payment times (notwithstanding what is likely to be a one-off fall in June).
“For small business owners, there is good news in this latest data,” Xero said, pointing to year-on-year increases in sales, moderate growth inwages,s and largely steady payment times (notwithstanding what is likely to be a one-off fall in June).
However, Xero said the slowdown in job growth was concerning, as it was hard for businesses to recruit staff.
“Using non-wage benefits for staff can be a good strategy to attract the people you need, while not locking in higher wages bills.”
Competition watchdog warns businesses about electricity rip-offs
The Australian Competition & Consumer Commission (ACCC) has urged small businesses to ask their energy company for a better deal, in light of some recent price increases up to 20% above the regulated safety net.
Energy companies have limits on how much they can charge when customers are on ‘standing offer contracts’; but this does not apply to customers on ‘market offer contracts’. Everyone has a right to receive a standing offer contract, but energy companies are not obliged to move customers onto one when they increase the price of an existing market offer contract above the safety net.
ACCC Commissioner Anna Brakey said some customers were paying more for electricity than needed.
“You don’t necessarily need to change energy company to get a better deal: the simplest thing you can do is to contact your existing company and ask how your current plan compares to the regulated standing offer,” she said.
If you do so, the ACCC recommends asking these three questions:
- How does my current plan compare with the reference price (i.e. the regulated standing offer)?
- Do you have a better deal at the moment?
- Are there any conditional discounts on your plans? Can I save more by paying on time or setting up a direct debit?
New data shows a decline in inflation expectations and wage growth
Australians’ inflation expectations have declined, which may impact the level of salary increases that workers request from employers.
Annual inflation expectations, as surveyed by Roy Morgan, peaked at 6.5% in November and have since fallen to 5.2% as of mid-August.
“Although the drop in inflation expectations is good news, there are signs that it may prove to be short-lived,” Roy Morgan CEO Michele Levine said, pointing to a decline in the Australian dollar and a rise in petrol prices.
“If these inflationary pressures in the economy continue to grow there will be renewed pressure on the RBA to increase interest rates again despite pausing and leaving interest rates unchanged at their last two meetings in July and August,” she said.
Meanwhile, the Australian Bureau of Statistics recently reported that wages rose by an average of 3.6% in the June quarter on an annualised basis and 0.8% on a quarterly basis.
In this cycle, annual wage growth peaked at 3.7% in the March quarter while quarterly wage growth peaked at 1.1% in the September 2022 quarter.