November 7th 2011
Welcome to our weekly Data Vault. The Vault is put together by one of our team here at Lighthouse and edited by me – we offer it as a resource to readers and clients who want to quickly get a feel for the data over the week without having to read a full blog or economic report. It will be released each Monday morning and while our primary focus is Australia we also include our key overseas indicators.
House prices in Australia have continued their steady slide lower with the privately produced RP Data-Rismark house price index showing prices fell for their 9th straight month in September. The seasonally adjusted index fell 0.2% while last months 0.4% decline was revised to show a drop og 0.6%. Prices are now down 4.1% over the past 12 months but 4.5% from their December 2010 peak. The ABS 8 capital city house price index confirmed the price falls with the index dropping 1.2% in Q3 with prices down 2.2% over the past 12 months.
TD-MI Inflation Index
Inflationary pressures continue to abate according to the TD-MI Experimental inflation gauge with headline index showing prices increased by 0.1% during October with the annual rate sliding further towards the centre of the RBA’s target band as it fell from 2.8% to 2.6%. Over the past 6 months prices have risen at an annual rate of 1.2%. The trimmed mean was also soft, rising by 0.1% over the month with the annual rate falling below the RBA’s target band, coming in at 1.6% while the annualised rate over the past 6 months is 1%.
RBA Private Sector Credit
Total aggregate private sector credit rose a little more than expected in September, rising 0.5% against expectations of a 0.3% rise with the annual rate improving from 3% to 3.4%. Housing credit grew by 0.5% with the annual pace of growth unchanged at 5.8%, with owner occupier credit up 0.5% while investor credit rose 0.4%. Business credit and personal credit both rose 0.4% over the month however their annual rates remain quite low at 0.2% and -0.9% respectively. The key is that the annual pace of housing finance remains is still at its slowest pace since the series began in the mid 1970s
New Home Sales
After a brief improvement in August when sales edged higher by 1.1%, total new home sales continued to soften in September, dropping 3.5% which is the 4 decline in the past 5 months. Over that 5 month period sales have slumped 18% to 6,267 which is almost 7% lower than the level reached during the GFC with house sales sitting at 5,595 with new unit sales making up the remaining 672. The drop in sales was pretty consistent across the states with NSW down 5%, Victoria down 7%, South Australia off 6% and Western Australia falling 3% Queensland did manage to buck the trend with total sales rising 6%.
Building approval resumed their downtrend in September after the pop in private non-housing or medium density dwellings was unwound. Total approvals fell 13.6% over the month while last months 11.4% increase was revised down to a gain of 10.7%. The fall in private non-housing approvals drove the bulk of the decline after then fell 30.7% with public approvals also falling substantially over the month. there was one positive sign with private housing approvals rising 1.1% and are now largely unchanged over the past four months and could be an early indication that they are starting to form a bottom.
RBA Forecasts – November Statement on Monetary Policy
Headline Inflation – Ex Carbon Tax
Core Inflation - Ex Carbon Tax
Dallas Fed Manufacturing Index
The Dallas Fed General Business Activity index rose much more than expected in October, moving back into positive territory for the first time since April this year. The index rose from -14.4 to 2.3 after it was expected to rise to -5.0. The production index remained positive however eased slightly from September while the volume of new orders index improves slightly however the growth rate in new orders slipped back into negative territory, as did the shipments index. Most importantly however the employment index built on last months bounce, rising from 13.4 to 15.1, up from its recent low of 5.4.
Chinese Manufacturing and Non-Manufacturing PMI
Both the Chinese Manufacturing and Non-Manufacturing PMIs fell in October and along with the sharp drop in the leading indicator over the past two months suggests that the Chinese economy is starting to slow far more significantly than previously thought. The manufacturing PMI dropped from 51.2 in September to 50.4 in October which is its lowest reading since the depths of the GFC, after it was expected to rise to 51.8 with a fall in new orders, especially new exports orders doing most of the damage. The fall in the non-manufacturing index was a little sharper with the index falling from 59.3 to 57.7 however the pace of expansion remains much more robust that the manufacturing sector.
US ISM Manufacturing and Non-Manufacturing indices
Like the Chinese PMI, both the Institute of Supply Management manufacturing and non-manufacturing indices fell in October however the slowdown in the US indices has been far more pronounced for much longer the Chinese indices. The ISM manufacturing index fell to 50.8 from 51.6 the previous month however the market was expecting it to rise to 52 while the non-manufacturing index edged lower from 53 to 52.9 however it was expected to rise to 53.5. The key however for both readings was the sharp drop in the prices paid index which was most pronounced for the manufacturing index with it collapsing from 56 to 41.
The final read of PMI’s across Europe for October were generally weaker with the manufacturing index revised down from 47.3 to 47.1 while the services index was revised down from 47.2 to to 46.4. The revisions mean that the composite index now sits at 46.5, revised down from the initial read of 47.2 and down from 49.1 from a month before. The worrying sign is that Europe’s core is coming under increasing pressure with the manufacturing PMI’s of Germany and France still well below 50 at 49.1 and 48.5 repsectively while the services indices were substantially revised with the German index now at 50.6 from 52.1 while Frances is now at 44.6 from 46.
US Nonfarm Payrolls
The growth in nonfarm payrolls remained muted in October with the economy adding 80k new jobs which was short of the markets expectations of an 95k increase. The private sector continues to do the heavy lifting adding 125k jobs while the government sector continues to cut jobs as the look to reign in their public finances. The unemployment rate and underemployment rate, which are derived from the household survey, both fell after the household survey showed the economy added 277k jobs over the month with just over 1 million added over the past three months. Over the last 12 months the economy has added 1.5 million new jobs according to the establishment survey and 1.2 million according to the household survey.
Yours in data – The Lighthouse Team.