It was a mixed news day from Asia and from the Australian economy yesterday, although there was one certainty – the Sydney property market is going gangbusters, but the rest of the country is cooling.
Building approvals were also solid in February, and while manufacturing showed a small gain, it was still stuck deep in negative territory, according to the March survey of the sector.
Building approvals rose at an annual 14.3% in February from the same month in 2014, well up on markets for a rise of 10.7% and the 9.1% rise in January.
The growth rate is the fastest recorded since last August, when approvals rose 20.6%. Overall, 18,768 new dwellings were approved in February, split equally between houses and home units, flats and townhouses.
Source: ABS, AMP Capital
But on a month on month basis, approvals fell 3.2% in February (seasonally adjusted), reversing a 5.9% gain in January, which was itself revised downwards from the originally reported 7.9% rise.
Seasonally adjusted, private sector house approvals eased 0.1% month on month, while approvals for non-private house dwelling approvals dipped 6% after a 15% rise in January (this is a very volatile part of the approvals series).
On a trend basis, the Australian Bureau of Statistics in yesterday’s statement said “Dwelling approvals increased in February in New South Wales (5.4 per cent), Queensland (2.1 per cent) and Victoria (1.3 per cent) but decreased in Australian Capital Territory (16.2 per cent), Northern Territory (2.7 per cent), Western Australia (2.5 per cent), South Australia (2.4 per cent) and Tasmania (0.7 per cent)”.
On a trend basis approvals were flat in the month.
The value of total building approved rose 1% in February, in trend terms, and has risen for eight months. The value of residential building rose 2.1% while non-residential building fell 1.4% in trend terms.
As the accompanying graph shows, the economy is being supported by the home construction sector, which is boosting financial services.
The second hand (pre-loved) home purchase market is bigger in value, but its contribution to economic growth is much smaller than the construction of home units, houses, etc.
But the big surprise yesterday was the 3% jump in Sydney home prices in March (and 13.9% in the year to February), according to the monthly survey from CoreLogic RP Data.
Prices rose 5.8% in the first quarter (not as solid as the 9% rise in the ASX 200 in the same time, though). That was the strongest quarterly rise since the three months to April 2009, as prices recovered after the GFC.
And the Australian Industry Group’s Performance of Manufacturing Index showed a slight improvement in March, rising 0.9 points to 46.3, but that was still well under the 50 mark, which separates contraction (below) from expansion (above).
Australian Industry Group head Innes Wilcox said the increased competitiveness from the lower Aussie dollar was being offset by declining mining investment, the slow shutdown of car manufacturing in Australia, and uncertainty caused by poor government.
