Ahead of the Reserve bank decision yesterday (non-decision really), we got the final data release ahead of today’s 4th quarter national accounts and GDP figures, and more early figures for January on how the economy started 2015.
The current account data for the December quarter showed a big improvement, despite another fall in our terms of trade in the quarter of 1.7%.
The improvement was such that the Australian Bureau of Statistics (ABS) said the trade account would contribute 0.7 percentage points to 4th quarter GDP, which will go someway to offsetting an 0.7% fall in business inventories in the 4th quarter and weak company profits.
Government spending rose 0.3% in the quarter to $70.5 billion, which should make a small contribution to growth (though the contribution from retail sales will be line-ball and not very strong).
But the big surprise from yesterday’s data releases was the sharp jump in building approvals in January which took the commentariat and other forecasters completely by surprise.
The ABS reported that the number of building approvals rose 7.9% from December, when they had tumbled 2.8% from November.
That fall and anecdotal evidence since saw analysts and others forecast a 2% fall in January – which was very wide of the mark.
The ABS said approvals for private sector houses rose 0.4% in the month, while the ’other dwellings’ category, which includes apartments and townhouses jumped 19.6%.
That is a very volatile part of the series and could very easily plunge 12% to 15% in February. It is lumpy and depends more heavily on local governments giving timely approvals to big apartment block developments.
Another factor could have been a spillover of big apartment development approvals delayed by the Christmas-New Year holidays, which does happen at the end of each year.
The ABS said the total number of dwelling units approved in January was 19,282, a record high (with the number of other dwellings at an all time high as well).
Approvals of private houses are 2.9% down year on year, but approvals for apartments, etc are up a huge 23.6%.
On a year-on-year basis approvals were up 9.1% from January 2014, against forecasts for a fall of 1.7%. Approvals were up 9.6% year on year in December, so the high level of January approvals tells us there is an enormous strength in the home construction sector going into 2015.
Dwelling approvals increased the most in NSW and Queensland, and with trend was towards approvals for apartments rather than larger houses.
Meanwhile, the current account deficit narrowed to a seasonally adjusted $A9.59 billion in the fourth quarter of 2014, the statistics bureau said, after the market had forecast a deficit of $A10.9 billion.
The surplus on goods and services widened by $A2.8 billion over the quarter, which is expected to add 0.7 percentage points to gross domestic product growth.
