Retail sales down in June, but up in the June quarter, house prices up in the June quarter, but down in the year to June.
The 4.2% rise in house prices in the June quarter had some commentaries yesterday mentioning the word ‘bubble’ and referring to last week’s speech by RBA Governor Glenn Stevens where he warned about the dangers of allowing a housing price bubble to emerge.
After last week’s strong rise in building approvals, especially new owner occupied dwellings (up 4.9%) in June, and further signs from the ANZ job ads survey yesterday of a steadying in the weakened labour market, plus the strong rise in manufacturing activity (though it’s still negative), the news of a 1.4% fall in retail sales in June, but a 2% rise in quarterly sales, didn’t change the RBA’s hand.
Analysts had been looking for a half a per cent rise after the 1% rise in May and the restated 1% in April (up sharply from the original 0.3%) from the Australian Bureau of Statistics in yesterday’s report.
A rise of 2% (most of it volume driven, so there was real demand across the quarter) in the June three months was solid, the best for almost two years and could add around 0.4 percentage points to growth in the second quarter and help keep the economy positive in growth terms.
This increase has been driven by the stimulus spending, low interest rates and lower petrol prices than a year ago.
What will cause the RBA some heartburn is the 4.2% rise in the home price index from the Australian Bureau of Statistics in the June quarter (which left the index down around 1.2% for the financial year to June 30).
House prices have been weak in the December and March quarters (the ABS revealed revisions to the original falls in yesterday’s figures), but the pick up seen in the Rismark and Australian Property Monitors surveys last week, was exceeded by the ABS’s series; APM saw a 3.3% increase in the quarter, for example.
The ABS said that retail sales in seasonally adjusted terms fell for all industries except Household good retailing (+2.9%).
"This is the opposite to May 2009 where all industries, except Household good retailing, had an increase. Industries with the largest decrease in June 2009 were Department stores (-8.8%) and Clothing and soft good retailing (-7.4%).
"In seasonally adjusted terms all states, except New South Wales (+0.1%), had a decrease in June 2009.
"In seasonally adjusted terms, June quarter 2009 had a 2.0% increase in volumes and a 0.1% increase in prices. In June quarter 2009, all states except the Northern Territory (-2.9%) had an increase in volumes. The States with the largest increases were Victoria, Queensland (both +2.4%) and New South Wales (+2.3%).
"All industries had an increase in volumes in the June quarter 2009. The largest increases were in the Clothing and soft good retailing (+3.7%), Household good retailing (+3.0%) and Cafes, restaurants and takeaway food services (+2.3%) industries," the ABS said.
The Bureau said house price index for the eight capital cities rose 4.2% in the June quarter, with "price rises in all capital cities with Sydney (+4.9%), Melbourne (+5.2%), Perth (+2.7%), Brisbane (+2.5%) and Adelaide (+3.4%) the major contributors to the weighted average of the eight capital cities. There were smaller contributions from Canberra (+3.6%), Hobart (+2.5%) and Darwin (+2.4%).
"Over the year to June 2009, preliminary estimates show that the price index for established houses for the weighted average of the eight capital cities decreased 1.4%. Annually, house prices rose in Darwin (+11.0%), Adelaide (+2.7%) and Hobart (+0.1%), and fell in Perth (-3.7%), Brisbane (-3.3%), Melbourne (-1.5%), Sydney (-0.9%) and Canberra (-0.2%)," the ABS reported.
