Australian Data
RP Data-Rismark House Price Index
Australian house prices continued their slow melt lower in October with prices falling 0.5% on a seasonally adjusted basis with the raw figures showing a 0.2% fall. It is the 10th straight month of declines from the peak in prices on a seasonally adjusted basis however prices had largely stagnated in the 6 months prior to the peak following their first monthly fall in June of 2010. Prices are now down over 5% from their peak, eclipsing the losses experienced during the GFC before the RBA and government stepped in and are expected to continue to slide over the months ahead.
RBA Private Sector Credit
Total aggregate credit rose a little less than expected in October, rising 0.2% against expectations of a 0.5% rise with the annual rate unchanged from a revised 3.5%. Housing credit grew by 0.4% with the annual pace of growth slowing further to 5.7% while business credit was flat and personal credit fell by 0.3% over the month. The pace of housing finance remains weak with the annual rate of total housing finance still at its slowest pace since the series began in the mid 1970s.
Building Approvals
The recent performance of building approvals has been nothing short of appalling with the down trend firmly intact after a number of large falls in September and October. There has been quite a bit of volatility in the private non-housing component, however, approvals have weakened substantially over the past 2 months. The biggest concern is the sharp fall in housing approvals in October. Public approvals have also continued to fall as the government’s stimulus programs continue to wind down. The persistent decline in building approvals is confirmation of the deteriorating outlook for the housing market that has been in train for most of this year.
Retail Sales
After awakening from their slump in the first half of the year as the mainstream interest rate outlook shifted from hikes to cuts, retail sales have gradually slowed over the past couple of months ahead of the November interest rate cut. This has been clearly evident as over the last 4 months we have had outcomes of 0.8%, 0.6%, 0.4% and 0.2% which has seen the trend growth in sales start to roll over again. The bulk of sales continue to be dominated by non discretionary items with trend sales in department stores and on clothing still weak.
Offshore Data
US CaseShiller House Price Index
House prices in the US continued to slide in September, posting their 5th straight monthly decline, where the losses accelerating over the last 5 months, and it was their 15th decline in the past 16 months on a seasonally adjusted basis. Prices fell 0.6% in September with the index now eclipsing its low set during the GFC with prices now back at the same level last seen in April 2003. This means that the peak to trough fall since the all time high in April 2006 now stands at 32.5%.
US Consumer Confidence
Consumer confidence as measured by the Conference Board, bounced hard in November, similar to the outcome already witness in the University of Michigan survey. The index surged from a revised 40.9 to 56.0 after it was only expected to increase to 44. There were also solid increases across both the present situation index and the expectations index. Confidence by region remains fairly stable with the only standout the Western region which remains much higher than the remainder of the US.
China PMI
Confirmation of the pull back in Chinese manufacturing was forthcoming this week with both the official, and HSBC PMI readings falling below 50, as was flagged by the HSBC flash PMI reading that we received earlier last week. The official index fell from 50.4 to 49.0 against expectations of 49.8 while HSBC’s reading fell from 51.0 to 47.7 after the flash reading last week indicated a drop to 48. The sub-components were also quite weak with new export orders slipping further below 50 while new orders also fell well below the crucial 50 mark.
US Manufacturing ISM
While manufacturing activity is slowing across Europe and now in China, the US, for the time being, appears to be bucking the trend with Institute of Supply Management’s manufacturing index rising more than expected in November. The index rose from 50.8 to 52.7 against expectations of an increase to 51.8. A surge in production provided the biggest boost with it rising from 50.1 to 56.6 while new orders also rose strongly, rising from 52.4 to 56.6. Prices paid continue to fall with the index printing below 50 for the second straight month.
Nonfarm Payrolls
Employment growth in the US continued at its moderate pace during November with the total nonfarm payroll growing by 120k according to the establishment survey which came in just below market expectations. Private payrolls continue to drive the growth, increasing by 140k while the government sector continues to trim its labour force. The unemployment rate, however, dropped sharply, down 0.4% to 8.6% despite the household survey only showing jobs growth of 278k over the month as the number of unemployed fell by 594k after the labour force shrank by a further 315k. The fact that the number of people not included in the labour force surged by nearly 500k took some gloss of the drop in the unemployment rate.