The week that was
It was a busy week for Australian economic news. Retail sales rose 0.6 per cent in February for an annual rise of just 3.0 per cent. This was a solid result, at best, suggesting on-going moderate growth in spending when one takes account of population growth around 1.7 per cent and retail price growth around 1 to 1.5 per cent. Per capita retail spending is roughly flat in real terms. The weakness in retail is most acute with small retailers – the large firms are doing relatively well.
In other economic news, the number of building approvals fell 6.2 per cent, but the fall reflects extreme volatility in the monthly series driven largely by one-off approvals of apartment projects. In trend terms, residential building approvals are broadly flat. Interestingly, non-residential approvals are trending lower after a strong 2017. This may put a dampener on the otherwise upbeat levels of business expectations which was reported in the illion business survey.
And surprising no one, the RBA left interest rates unchanged and it didn’t really change its tone which suggests that rates will remain on hold for at least a few more months.
The week ahead
It is a relatively quiet week for local data, with the main release the housing finance data for February. A flat result is expected.
In recent months, ilthere has been a cooling in demand for new housing finance with a loss of momentum in the value of loans for investment purposes. The tightening in lending rules for investors is clearly starting to bite. Finance for owner-occupiers has been broadly flat over recent months as the overall housing market continues to slow under the weight of record household debt levels, weak wages and incomes growth and what some are terming buyer fatigue in reaction to generally high prices.