Markets and consumers feel oil price pain: Economy roundup

The seeming inability of the world’s political leaders to do anything meaningful to halt the rise and rise of oil prices is taking its toll on both the sharemarkets and mums and dads.

Australia’s Resources Minister Martin Ferguson is currently in Saudi Arabia for talks aimed at resolving the global oil crisis, but his comments so far indicate little prospect of a short-term fix to the problem.

In fact, a contrary consensus appears to be emerging that higher oil prices are here to stay – perhaps good news for the environment, but something of a worry on the economic front, particularly given the reliance of the shaky US economy on affordable fuel.

Those fears are a key factor behind a fall in Australian sharemarkets today, with the S&P/ASX200 down 1.1% on Friday’s close to 5229.4 at midday.

The usual flipside of a weaker US generally is a stronger Australian currency, and today has been no-exception, with the Australian dollar trading at US95.56c at 11.35pm.

On the consumer side of things, expensive fuel is hitting hip pockets – and, unsurprisingly, the first thing people are staying away from is a new car.

New car sales fell 1.6% seasonally adjusted in May, according to Australian Bureau of Statistics data released today, with four wheel drives suffering a big 4% fall.

New car sales fell fastest in Tasmania and the twin resources states of Queensland and Western Australia, in a sign that the boom-time conditions there may be coming off the boil slightly.

As for that other great Australian consumer commodity, the family home, auction clearance rate data from the weekend shows a softening market in Melbourne, down from 67% the previous weekend to 62%, and Brisbane, down from 30% to 29%.

The Sydney housing market remained steady with a clearance rate of 53% and Adelaide was the only city to experience an increase, with clearance rates up from 41% to 53%.

Read more on fuel costs and housing affordability