Data Vault – A weekly wrap up of key economic releases in Australia and beyond

October 3, 2011

Economic Data Vault

October 3rd 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.

Australian Data

New Home Sales

After two months of capitulation which saw declines of 8.7% in June followed by an 8% fall in July, Australian new home sales stabilised somewhat in August, rising by 1.1%. The breakdown saw detached house sales rise by 1.5% over the month while sales of units fell by 2.2%. Currently detached new home sales are down 15% over the quarter with the current level of sales still below the low hit during the GFC. The bulk of the gain was drive by sales in QLD where detached sales rose 9.8% after the government recently implemented a stimulus package to support the housing market.

RP Data-Rismark House Price Index

Australian house prices continued their slow melt lower in August with prices across all capital cities falling by 0.4% seasonally adjusted to be down 3.6% over the past 12 months. The August fall marks the 8th straight months of declines with the peak to trough fall now 4.1% seasonally adjusted. While remaining more resilient to date compared to the capital city counterparts, prices outside of the capital cities fell 0.9% over the month to be down 2.8% over the past year. The capital city median price now sits at $450,000 while the regional median prices is $321,000.

RBA Credit Aggregates

The growth in the stock of outstanding debt in Australia remained anemic in August. Total outstandings grew by 0.2% over the month, driven by a 0.4% rise in housing credit while business credit was unchanged from a month earlier and personal credit fell by 0.9% over the month. The annual pace of housing credit growth dropped to 5.8% which is yet another series low, stretching back to 1977. The data confirms that house holds continue to de-lever their balance sheets by paying down debt.

Offshore Data

US New Home Sales

The data on the US housing market continues to disappoint with new home sales falling more than expected in August. Total sales fell 2.3% against expectations of a drop of 1.7% to an annual pace of 295k. The annual pace in August was only 27k above the record low since the series began more than 50 years ago and is well below the current pace of housing starts. With sales so weak and a large glut of existing home sales still on the market it begs the question why home builders continue to build even more homes, adding to supply and additional pressures on home prices.

US Chicago National Activity index

The Chicago Fed National Activity index, which is composed of 85 economic indicators from 5 broad categories including output and income; employment, unemployment and hours; personal consumption; housing starts and sales; and inventories and orders, fell back into negative territory for the 4th time in the past five months in August and continues to point so weak economic growth ahead. At its current level the index suggest the annual rate of growth will remain below 2% in the 3rd quarter.

US Dallas Fed Activity Index

The weakness in the Fed regional activity indices persisted through to September with the Dallas Fed General Business Activity Index falling unexpectedly falling to -14.4 from -11.4, indicating the pace of contraction in activity accelerated after the index was expected to rise to -8. The index has now been negative for the past 5 months with the current reading only 3.1 points above its recent low in June and 3.2 points above the low from July last year. The growth rate of new orders however did improve from -4.5 to 0.6 but remain anemic at best.

US S&P CaseShiller House Price Index

While the bulk of US housing data remains depressed there is some encouraging signs that the persistent decline in house prices has stalled with the S&P CaseShiller 20 city house price index largely unchanged over the past 4 months after the downward pressure following the stimulus induced bounce begins to fade. On a seasonally adjusted basis prices rose 0.05% in July and are up 0.25% over the past 4 months. The data however pre-dates the debacle over the US debt ceiling that had a profound effect on business and consumer confidence and the more recent intensification of the European Crisis but hopefully prices has remain stable over the months ahead.

US Pending Home Sales

Pending home sales in the US remain subdued with the index sliding 1.2% in August which was a touch better than the -2% the market had been expecting. After the pop in actual existing home sales last month there is now a small gap opening up between pending home sales and actuals. Given that pending homes sales tend to lead actuals by 4 to 8 weeks the gap suggests that existing home sales could fall up to 5% over the coming months

US Personal Income and Spending

The latest data on US consumers income and spending was mixed with Consumer income unexpectedly falling by 0.1% in August after it was expected to rise 0.1% while July’s 0.3% rise was revised down to a gain of 0.1%. Meanwhile consumer spending continues to rise, climbing 0.2% in August which was in line with expectations while last months solid bounce was revised down slightly. Inflation adjusted however consumer spending actually fell marginally over the month.

US Consumer Confidence

The final read of the University of Michigan consumer sentiment index for August was revised up lightly from the preliminary reading of 57.8 to 59.4. the Upward revision take the rise in the index from the previous month near all time record low to 3.7 points. However the charts speaks for itself, showing just how fragile sentiment is among US consumers as the outlook for the US and the Global economy look increasingly uncertain

China Manufacturing PMI

We finish on a somewhat more positive note this week with the Chinese manufacturing PMI edging higher for the third straight month according to the China Federation of Logistics and Purchasing. The index rose from 50.9 to 51.2 which was just ahead of the estimated 51.1 with the better than expected rise driven by an increase in new export orders. While this is certainly good news we much point out that the HSBC Chinese Manufacturing PMI was actually below 50 for the second month in a row

Yours in data – The Lighthouse Team.

greg@lighthousesecurities.com.au

www.twitter.com/gregorymckenna

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