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标题: [CommSec Research]Extended retail slump; Building approvals rebound [打印本页]
作者: dyno 时间: 2011-5-5 23:51
标题: [CommSec Research]Extended retail slump; Building approvals rebound
Important Information
The summary and attached
report has been prepared without taking account of the objectives,
financial situation or needs of any particular individual. For this
reason, any individual should, before acting on the information in this
report, consider the
appropriateness of the information, having regard to the individual’s
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appropriate professional advice. In the case of certain securities
Commonwealth Bank of Australia is or may be the only
market maker.
Extended retail slump; Building approvals rebound
Building Approvals; Retail trade
- Council approvals to build news homes rose
by 9.1 per cent in March after sliding by a revised 5.3 per cent in the
prior month. In annual terms approvals are down 18.1 per cent on a year
ago. The pick up in approvals
was driven by apartment approvals which rose by 26.1 per cent in March,
while private sector new house approvals fell by 0.8 per cent.
- Victoria
(up 26.8 per cent) accounted for the bulk of the rise in approvals in
March, followed by NSW (up 8.5 per cent), while most of the weakness was
centred on South Australia (down 22.5 per cent)
and Queensland (down 15.0 per cent).
- Retail
spending fell by 0.5 per cent in March after rising by an upwardly
revised 0.8 per cent in February. Five of the eight states and
territories recorded a slide in retail activity. Victoria was once
again the standout performer with sales up 0.9 per cent in March.
- In the March quarter, inflation-adjusted retail trade fell was unchanged after sliding by 0.4 per cent in the December quarter. The weakness in retail
spending is in line with the Reserve Bank's latest comments regarding a potential decline in real GDP over the March quarter.
What does it all mean?
- The pickup
in building approvals in March could not have come at a more opportune
time. Over the past few months the housing sector has pretty much come
to a standstill. Housing finance has slumped since the start of the year
and
property prices have recorded the biggest quarterly fall in
records going back almost seven years. In addition despite the nine per
cent rise in the month, approvals are still down more than 18 per
cent on a year ago.
- Interestingly
when you delve a little deeper the rise in approvals loses some of its
lustre. The rise in approvals was centred solely on a huge 26 per
cent surge in apartment approvals which generally tends to be volatile
and lumpy. More importantly the private sector new house segment
actually eased further in March and is now down almost 18 per cent on a
year ago. In fact new house approvals have now fallen for eight out of
the last ten months.
- The rapid fire rate hikes over the latter part of last year should bear the brunt of the blame for the lack of activity in both the housing sector and consumer spending. And this weakness was further compounded
by the vagaries of the weather - which will remain a concern over the next couple of months.
- The retail sector has certainly
done it tough over the past year. Annualised growth in sales is still
subdued at just 2.3 per cent – a far cry from the decade average growth
of 6 per cent. The tightening of monetary policy and
unwinding of stimulus has been the key reason for the turnaround in the
fortunes of the retail sector. No doubt part of the sustained weakness
in the retail sales data can be blamed on lower prices, rather than
weaker spending, given the widespread discounting
taking place across the retail sector. However weaker volumes are
clearly playing their part. Prices of some goods are coming down because
our dollar is strong, but plenty of retailers are cutting prices
because consumers refuse to spend.
- Overall it is quite clear that the
retail activity is sluggish, especially when you consider that retail
sales effectively went know where for the entire March quarter in
inflation adjusted terms.
The domestic economy is at present limping along and the lack of activity
is consistent with the latest view portrayed by the Reserve Bank - that
real GDP may have gone backwards in the March quarter. Given the
potential downgrade
to the Reserve Banks near term growth forecasts it is unlikely that the
Reserve Bank will be raising interest rates anytime soon.
- It’s
not all bad news for retailers. With the job market tight, wages rising
and wealth levels tracking higher, there are good reasons for consumers
to start spending
again. But it will require the Reserve Bank to take an extended period
on the interest rate sidelines. CommSec does not expect the next rate hike to take place till at least August at the earliest.
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