Perhaps some further stimulus might be needed for the home building sector later in the year.
That’s after a very sharp, 14%-plus fall in new private home approvals last month.
The fall in building approvals was far more important than a 0.6% rise in retail sales in April.
Interest rate cuts are out of the question at the moment and if the Reserve bank did cut, then it would be a strong sign it saw the economy floundering.
The rise in interest rates has finally caught up with the building industry, with a very sharp slump being recorded in building approvals last month.
The news kept the Reserve Bank off the rate rise lever yesterday and possibly for several months to come because the size of the fall in approvals came as a complete surprise.
Figures from the Australian Bureau of Statistics shows that total building approvals last month fell 14.8%, driven by a 13.5% slump in the number of new homes approved.
Just 8,404 new private homes were approved last month, the lowest monthly total in 11 months and down almost 1,300 from March.
The fall was much greater than forecast with economists tipping a drop of 5%.
It’s a sign the first home buyers building boom has run out of gas, with demand and rate rises combing to reduce demand.
At the same time the very volatile private sector other dwelling approvals fell 5.4% in April after a huge 58% rise in March.
As a result the falls saw the seasonally adjusted estimate for the value of total building approved fall 13.3% in April.
The ABS said, "The seasonally adjusted estimate for the value of new residential building fell 4.6% while the value of residential alterations and additions fell 8.4%. The seasonally adjusted estimate for the value of non-residential building fell 28.5%."
Retail sales rose 0.6% in April, down from the 0.8% increase in March, which was a sharp upward revision from the originally reported 0.3% increase. Retail sales fell 1.2% in February.
The rise in April was double market forecasts for a rise of 0.3%.
But rather than showing a boost in discretionary sales, the breakdown from the ABS showed that consumers bought more food, home products and clothing, all essentials.
Spending in department stores, cafes, restaurants and takeaway outlets fell.
And manufacturing still expanded, but at a much slower rate in May, according to the latest Performance of Manufacturing survey.
The rise in retail sales was driven by increases in three retail industry groups, according to the ABS. These were Household Goods Retailing (2.6%), Food Retailing (1.3%) and Clothing, Footwear & Other Personal Accessory Retailing (0.3%).
The ABS said sales fell in Department Stores (-2.4%), Other Retailing (-0.7%) and Cafes, Restaurants & Takeaway Food Services (-0.7%).
"South Australia (2.9%) recorded the largest rise in sales in April (seasonally adjusted), followed by Victoria (1.5%), Queensland (1.2%), the Northern Territory (1.2%) and Tasmania (0.5%).
"Sales fell in New South Wales (-0.8%), the Australian Capital Territory (-0.3%) and Western Australia (-0.1%)," according to the ABS.
"In original terms, Australian turnover decreased 2.4% in April 2010. Australian turnover increased 0.9% in April 2010 compared with April 2009," the ABS added.
