April saw building approvals recover from March’s restated big fall as more flats, units and townhouses were approved for construction.
Figures from the Australian Bureau of Statistics show that total building approvals rose 7.8% in April from March, and were 5.2% higher than a year ago.
That include3d a rise in the number of private homes approved.
The market had been looking for a fall of 0.5% from March, and to be lower than a year ago.
The figures show that April has seen a continuation of difficult conditions in the important retailing and housing sectors. For that reason next week’s May employment numbers assume more importance. We could see the first hint of an impact of the tough anti-inflation campaign on job numbers.
Falling retailing and housing will be felt in the March growth figures, out later this morning.
Approvals for private dwellings rose 1.3% in something of a surprise, considering last Friday’s credit figures from the Reserve Bank showed a decline in the growth rate. April’s figure is well above the restated drop of 4.9% in March (originally a fall of 5.8%)
But most of the increase came from a 17.5% jump in the number of approvals for flats and units and townhouses (so-called medium-density dwellings).
That particular part of the ABS figures is becoming increasingly ‘lumpy’ with large swings in approval numbers from month to month. The March figure was a rise of just 0.3% on February. There could be just as big a fall in May in this area.
The value of housing approvals rose in seasonally adjusted terms by 4.1% in April. The seasonally adjusted estimate for the value of new residential building approved rose 10.1% in April. The seasonally adjusted estimate for the value of alterations and additions rose 6.6%, and the value of non-residential building fell 2.9%.
Meanwhile, on the trade front, the current account deficit widened to $19.5 billion in the March quarter, from a revised $18.7 billion in the previous three months.
But that was around $1 billion better than the $20.5 billion current account deficit in market forecast.
That will help the growth figures in the March National Accounts, out later today. The betting is for a small dose of positive growth, with some unexpected outcomes.
The ABS said based on its figuring, the increase of $1.919 billion in the deficit on goods and services in the March quarter would subtract 0.7 percentage points from growth in the same period.
If that happens the March quarter National Accounts are expected to show the pace of economic growth moderated to an annual rate of 3% in the three months, down from 3.9% in the December quarter.
First quarter GDP growth is now expected to rise by around 0.4%, according to market forecasts.
And in commentary yesterday, economists at Goldman Sachs JBWere said:
“Today’s (Monday’s) retail sales report was important because it dismisses (at least for now) the primary potential catalyst for another RBA rate hike – a re-emergence of robust consumer spending.
“With real retail turnover contracting in the March quarter, today’s nominal print suggests that this anaemic retail environment has spilled-over in the June quarter – it is hard to envisage the RBA hiking again in this context.
“The April retail trade report was weak on a number of fronts, but what matters most is that the sequential slowing in retail momentum has become entrenched since the start of the year.
“For example, beyond the modest fall in the month itself, consider that: • There was a significant 0.3ppt downward revision to growth in March (now +0.2%), and total sales have fallen now in three of the past four months;
- “Year-ended growth has now halved in only the past 4 months, to be +4.7%; • Three-month annualised growth is now flat, compared with a more than 10% reading at the start of the December quarter 2007. The pace of this slowdown is even more marked excluding the volatile food component;
- “In trend terms (which look through monthly volatility), April’s retail sales outcome was the weakest monthly outturn in more than eight years.
“It is also interesting to note that the loss of sales momentum has been most severe among smaller retailers, with a more modest deceleration at the big end of town – this may suggest that conditions are not quite so bad for listed retail equities, which tend to be larger corporations.”
