The gulf between Australia and the US has again been underlined.
Australia is booming, America is struggling.
And yet the US market jumped nearly 70% in the past year, Australia by just over 50%.
Both were a bit short of the global market index which was up 73%.
Wall Street had its best rise since the days of the depression in the last year; the market was up 68% from the low on March 9 last year, to yesterday.
That will no doubt please the more than 15 million people out of a job, including the 8.4 million Americans who have lost their jobs since December 2007 and the 38 million people on food aid from State and Federal Governments.
Despite this recovery, American consumer confidence remains weak, unlike Australia where figures out yesterday showed business confidence and conditions are solid levels and approaching the best for several years.
Our market was up 51% in the past 12 months.
But our economy is far better placed than the US.
Consumer confidence figures here out yesterday confirm the upturn in business from the NAB on Tuesday.
The Westpac/Melbourne Institute consumer sentiment Index rose 0.2 per cent in March to 117.3 points, from 117 in February, a reading also supported by the most recent weekly Roy Morgan poll.
Last week’s rate rise didn’t seem to have an impact on confidence, but then many people haven’t seen the rise translated to their mortgage payments.
The Australian stockmarket is up around 51% since its lows on March 6, 2009. But more our economy is growing, but with dangerous pressures emerging in the housing sector from rapid price rises.
And yet, despite this high level of confidence, there’s been a noticeable fall in new housing commitments (for new and existing homes) in the past few months.
There was a 7.9% fall in the number of home loans in January, the biggest fall for a decade.
That was after a fall of 5.5% in December and follows the ending of the most generous elements of the first home buyers’ scheme.
The Australian Bureau of Statistics figures out yesterday showed the fall in housing finance commitments in January
"In seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations and additions decreased 3.3%," the ABS reported.
"In fixed terms, the number of commitments for the purchases of established dwellings fell 4.0%, the number of commitments for the purchase of new dwellings fell 3.5% and the number of commitments for the construction of dwellings decreased 1.4%.
"In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments decreased from 21.0% in December 2009 to 20.5% in January 2010."
"The seasonally adjusted series for the value of owner occupied commitments fell 5.0% in January 2010."
But much of this would have been falling demand from first home buyers, although demand for finance for the purchase of existing homes was also weak.
That should normally ease some of the concerns about the housing price surge, but it has to be pointed out that the Reserve Bank sees the raw figures that go to the ABS (and would have a good idea of what happened last month) and draws its own conclusions.
So the speech yesterday by the Deputy Governor in charge of economic analysis, Phil Lowe, would have been written in the knowledge that bank home lending was weakening.
And yet he still warned: “We will need to keep a strong focus on improving the supply side of the economy so that demand can grow solidly without putting upward pressure on inflation."
“We also face the significant challenge of increasing the supply of housing at a time when business investment is also very high.”
They would be that the danger is in the steep fall in the value and number of new financing commitments in recent months, as the economy improves, unemployment falls (the wealth effect from rising property and share prices makes people feel more comfortable) there’s growing unmet demand from consumers.
No. of dwelling commitments, Owner occupied housing
The question to be asked if whether the fall in housing finance represents a fall off in demand from home buyers (existing and potential) or rationing by banks already heavily committed to the sector because of their home lending splurge in 2009.
And the improvement in general business confidence and conditions in the National Australia Bank survey for February has been felt by small and medium businesses.
On the survey was the bets result for the sector in two years.
The NAB SME survey showed SME business conditions strengthen further in the December quarter. But SMEs performed slightly weaker than their larger counterparts.
"Business conditions among Australia’s small to medium sized businesses improved strongly in the December quarter, according to NAB’s business survey of SMEs (small & medium enterprises), following the very sharp increase in the previous quarter.
"NAB’s SME business conditions index rose by 8 points to 13 index points in the December quarter (with 30% of SMEs reporting good or very good conditions and 17% poor or very poor conditions). Larger businesses also increased by 8 points, but were a touch stronger at 14 index points.
"By size group
