Housing loan approvals fell again in January as an increased flow of credit to investors was more than offset by the continued slide in lending to first home buyers.

The number of loans to home buyers fell by 7.9 per cent in seasonally adjusted terms, the Australian Bureau of Statistics (ABS) said on Wednesday.

It was the fourth fall in a row and the biggest for nine years.

It brought to the total to a 15-month low, 21 per cent below the peak in June.

The proportion of first-timers in the total fell to 20.5 per cent, also a 15-month low, well down from the recent peak of 28.5 per cent in May.
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The coming week will be a big one for the Australian economy.

On Tuesday, the Reserve Bank of Australia (RBA) will announce its monthly decision on interest rates.

And that decision will be subject to judgment in the context of data from the Australian Bureau of Statistics (ABS) next week, although the key figures have probably already been released.

The national accounts, due on Wednesday, are the most comprehensive assessment of the level and growth rate of economic activity.

All of the 16 economists polled by AAP forecast a rise in real, seasonally adjusted gross domestic product (GDP) in the December quarter, with a median forecast of 0.9 per cent.
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Data releases over the coming week or so will show whether the economy is growing as quickly as employment figures suggest it has.

The labour force figures from the Australian Bureau of Statistics (ABS) earlier this month showed a stunning fall in the unemployment rate.

The supply of labour is not keeping up with demand - not by a long shot.

The result has been a sharp drop in the unemployment rate.

At 5.3 per cent in January, it was half a percentage point under the six year high of 5.8 per cent seen in October, only three months before.
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A downward trend in lending to businesses probably says more about the state of credit markets than the health of the businesses themselves.

The seasonally adjusted value of commercial finance commitments by banks and other lenders rose to $26.677 billion in November, from $25.662 billion in October.

But that October figure was the lowest for more than four years and the rise of four per cent followed a drop of 17 per cent in October.

And the Australian Bureau of Statistics’ (ABS) trend estimates, which smooth out the humps and hollows in the seasonally adjusted data, show commercial lending has fallen continuously since January 2008.

The decline has reduced the flow of lending to little more than half the all-time high reached in June 2007, the month before the sub-prime loans crisis outgrew the business pages and became front-page news.
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First home buyers shied away from the housing market in November as government grants waned and rising mortgage rates took their toll.

And home buyers will have another rate rise to budget for following the central bank’s board meeting on February 2, economists say.

New loans taken out by owner occupiers fell 5.6 per cent to a seasonally adjusted 59,516 in November, the Australian Bureau of Statistics (ABS) said on Tuesday.

It was the second monthly fall in a row and the smallest number of new housing finance commitments in a month since February 2009.

ANZ economist Alex Joiner says new mortgages were down as first home buyers departed the property market.
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Better-than-expected building approvals data shows that the Australian property sector is going to be “red hot” in 2010, economists say.

But the sector will face some downward pressure if the Reserve Bank of Australia (RBA) lifts interest rates for an historic fourth consecutive month in February.

Australian building approvals rose 5.9 per cent to 13,724 units in November, seasonally adjusted, from an upwardly-revised 12,962 units in October, the Australian Bureau of Statistics (ABS) said on Wednesday.

The rise surpassed the median market expectation of a three per cent rise for the month.

“Australia is going to be red hot in 2010,” ICAP economist Adam Carr said.
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Economy activity remains patchy even after a full year of recovery.

And it will most likely stay patchy even when the main measures of activity show the economy is in full swing.

When the Australian Bureau of Statistics (ABS) reports the December quarter national accounts on March 3 it will very probably make it four quarters of expansion in a row.

After a contraction in the last quarter of 2008 growth had seemed a long way off.

But the recovery, unlikely though it seemed a year ago, will not spread the joy around equally either through time or between states and industrial sectors.

The retailers have had their day in the sun, the surge in spending accompanying the cash handouts of late 2008 and early 2009 has washed through the economy and will not be repeated.
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Trying to forecast next week’s gross domestic product (GDP) has become a bit of a stab in the dark.

Not only have the components of GDP in the past few weeks been all over the shop, the Australian Bureau of Statistics (ABS) is introducing new international accounting standards for the national accounts.

That’s why the September quarter report has been delayed until next Wednesday, rather than its usual release time of the first Wednesday in December.

It means the data history for the series will be revised, and of course, if you don’t know your starting point, it’s difficult to gauge where you are going.

What we do know is that consumer demand was soft in the three months to September, home building has improved, business investment remains weak and government spending has been strong, especially construction.
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The inflation rate was 1.3 per cent in the past year - unless you’re an age pensioner, in which case it was 2.4 per cent, official figures show.

In the past five years, the consumer price index (CPI) has risen by 16 per cent, but most age pensioners would not be surprised to find official figures confirm their cost of living is rising faster.

The CPI is generally seen as a good yardstick for measuring the cost of living.

And it is, on average, at least for households located in the state and territory capitals where the Australian Bureau of Statistics (ABS) collects its raw CPI price data.

Most households derive their income primarily from wages, so it should be no surprise that the cost of living index for such households has risen by about the same margin as the CPI over the past five years.
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By Jill Fraser for Lending Central

Economists are split on whether the RBA will raise rates again in December. AMP Capital Investors’ chief economist, Shane Oliver told Lending Central that it’s a close call, largely based on economic data which is due to be released over the next few weeks.

(ABS Labour Force figures, business consumer confidence data, employment data, housing finance figures are all coming out this week.)

Risks to inflation and the danger of generating other imbalances in the economy as a consequence of leaving interest rates at low levels are likely to continue to push the cash rate up.

Oliver notes “while the Reserve Bank’s Statement on Monetary Policy revised up its GDP forecast for 2010 to 3.25% from 2.25% and its inflation forecast for 2010 to 2.25% from 2%, this had already been pretty well flagged and so is no surprise.

He says, more importantly, the RBA has indicated that, with spare capacity being less than earlier thought and growth on it way back to trend, further interest rate increases are likely on the way. However, it is continuing to indicate that the process of raising interest rates will be gradual.
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Annual expenditure by businesses on research and development has surged by 15 per cent, new figures show.

Figures released on Friday by the Australian Bureau of Statistics show research and development spending topped $14.3 million in 2007/08.

Innovation Minister Kim Carr welcomed the news but said it was important to remember that 2007/08 was a boom year and it would be difficult to maintain momentum through the global recession.

“It is good to see strong growth in business spending on R&D, especially after the setback of the late 1990s, when policy changes by the Howard government caused spending to decline for the first time since records began,” Senator Carr said.
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Gloomy government predictions for unemployment to peak at 8.5 per cent in 2010/11 are unlikely to materialise after a recent stampede of positive economic indicators, economists say.

A median forecast of five economists surveyed by AAP was for unemployment to peak at 6.75 per cent by 2010 following better-than-expected employment, consumer confidence and gross domestic product figures released in September.

Australian Bureau of Statistics (ABS) labour Force data released on Thursday showed the nation’s jobless rate was at 5.8 per cent in August, holding steady with the July and June result.

RBC capital markets economist Su-Lin Ong said the jobless rate will peak at seven per cent in 2010, down from the 7.5 per cent prediction RBC made prior to the government’s May budget.
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The argument that Australia is managing a soft economic landing grew a little more convincing with the release of business investment data on Thursday.

Next week, the Australian Bureau of Statistics (ABS) will release the national accounts for the June quarter.

That set of data will include the Bureau’s estimate of gross domestic product (GDP), the most comprehensive measure of economic activity.

In the March quarter GDP managed to dispel the gloom with a modest increase of 0.4 per cent in real, seasonally adjusted terms.

Those figures marked a sea-change in consumer and business sentiment.
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In just over a week we will have an official update on Australia’s battle to avoid being branded with the R word.

The Australian Bureau of Statistics (ABS) will issue the national accounts for the June quarter on Wednesday, September 2.

The accounts will include the bureau’s estimate of growth in gross domestic product (GDP) in the quarter.

That single figure will inevitably be used to judge Australia’s performance against the standard, albeit arbitrary, yardstick by which recessions are commonly gauged - two consecutive quarters of declining GDP.

That stigma has been avoided so far.
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The number of monthly home loan approvals rose for the ninth straight month in June but look set to peak in the near future as the threat of rising interest rates looms.

The number of new housing finance commitments for owner-occupied housing rose 1.1 per cent in June, seasonally adjusted, to 65,151, the Australian Bureau of Statistics (ABS) said on Monday.

Although it was the ninth consecutive monthly increase and the highest monthly rise since January 2008, the result was slightly below the median market forecast for a 1.8 per cent gain.

Nomura Australia chief economist Stephen Roberts said the number of new loans for owner-occupied housing remained “very firm”, but was likely to peak in the next month or so, particularly as a roll back of the first home buyers grant boost near.
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