When the truck sales figures came out this week from the Truck Industry Council for July, a lot of the results could be predicted, but one factor struck me as being at odds with a lot of the general commentary I am hearing about the economy of Australia from elsewhere, and it poses the question, is there a recession on the way?
When we look at the truck sales for the first seven months of the year, the number is 27,576. Now, it’s never a good idea to extrapolate, but if we do take that figure and assume that level of truck sales will remain the same between now and the end of the year and remembering there is always a bump in sales figures around September October each calendar year, what do we see?
If you extrapolate those figures out it suggests that the total number of trucks sold in Australia above four and a half tonnes in 2023 will be well over 47,000. If we look back 10 years ago, in 2013, the total Australian truck market was 30,000 trucks.
Basically, since the pandemic, which restricted truck sales numbers for a relatively short time, the whole truck sales world has been going gangbusters. This is something which PowerTorque has commented on, on a regular basis.
At the same time, during this period, we are constantly reading stories or hearing news reports about concerns that the economy is about to tip into a recession. Recession means a slowing down of economic activity often described in news reports as negative growth, but really should be more correctly described as the economy contracting.
If the economy really is that weak, at the point where the level of economic activity is about to go backwards. Why are all of these trucking operators buying so many trucks?
I don’t think it’s out of the goodness of their hearts, trying to support the poor truck manufacturers. And I don’t think it’s because truck operators are naive or ill informed. If you speak to most trucking operators, they have a very good idea of exactly how the market for their services works, and in what condition that market is at any time.
So it would seem that the truck sales figures contradict the naysayers who are worried about the Australian economy tipping into recession, because it would suggest to me that the fundamentals of our economy are very strong.
If they weren’t strong, no sane trucking operator would be going out and expanding their truck fleet. You will only expand your truck fleet in the expectation of continuing growth in the freight task, which is a reflection of a continuing growth in the Australian economy.
I may have got this all completely wrong. But I wonder if all of those economists should think about perhaps keeping an eye on sales figures both for the truck and the trailer industry, as an indicator of where the actual sentiment is at at any point in time in our economy.
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