4 Apr 2014
• Private sector credit growth continues to trend higher rising in February and lifting the annualised pace to its equal highest since April 2009. Growth remains driven by housing, led by investors with owner-occupiers strengthening. Business credit is also rising strongly whilst personal credit remains soft.
• New home sales data has shown a sharp jump in February to the highest level since May 2011. Recent strength has switched to houses following unit-led growth in 2013. Strongest gains have been in QLD and SA.
• March dwelling prices were up a record for the month accelerating growth to 10.6% for the year on the same time last year - a 4 year high. Sydney remains fastest with growth of 15.6% on the same time last year, with Melbourne not far behind. The other capitals are up at much slower paces, with Perth moving lower.
• China rolled out a mini stimulus package bringing forward already announced future measures regarding increased spending on railways, upgraded housing for low-income households, and tax relief for small businesses.
• Data released in Japan showed household spending unexpectedly dropped to be down 2.5% in February. The drop in spending is just before the GST is set to rise in Japan, which is concerning given sales usually increase leading into a GST rise (forward purchasing). The Japanese government has acted swiftly bringing forward 40% of expenditures slated for the next financial year.
• Recent US economic data has been positive, largely in line with expectations. Personal income and spending both rose in February and consumer sentiment rose in March.
• US central bank chairwoman Yellen offered commentary on the US economy stating they will maintain their economic support for some time to come. She made specific references to the sluggish recovery and the low participation rate numbers (people falling out of the labour market) in the jobs market.
• Price data out of Europe indicates inflation in the Eurozone has further decreased to 0.50% in March. Additional stimulus from the European Central Bank is now expected.
• The local share market finished higher for the week assisted by the RBA’s decision to keep rates on-hold and some positive economic data. China’s mini stimulus package and a speech by the US central bank chairwomen also assisted.
• US markets pushed higher, moving ever closer to breaking all-time highs. European and Asian markets were also higher.
• In stock news, BHP rallied higher sparked by press speculation that the company may be considering a spinoff of its non-core assets that could create a new $20bn resources company.
• Telstra is looking to play a major role in the construction of the NBN with negotiations on a major fibre-to-the-node (FTTN) pilot soon to be completed. Speculation is that the deals to connect homes and premises to a FTTN network could be worth $5-6bn.
• The gold price has been fluctuating with Russia/Ukraine concerns pushing it higher and US central bank continued economic support pushing it lower. US central bank support looks like it’s winning out. Iron ore prices have also been rising.
• Aussie dollar has remained relatively steady this week (92c) even in light of the slew of economic data released both locally and globally.
• Former Labor leader Simon Crean has stated that the labour movement’s leadership (the ACTU) must take swift action against the militant construction union CFMEU, after a record court fine of $1.25m and unprecedented criminal sanctions for its blockade of a building site in Melbourne. There have also been calls for the Labor party to reign in renegade unions.
• Highly regarded Treasury Secretary Martin Parkinson has been asked by PM Abbott to stay on in the role until after Australia hosts the G20 leaders’ summit in November. The move is an about face for the PM after he announced Parkinson’s resignation following his swearing in as PM last year. Looks like Treasurer Joe Hockey has got his way for the time being and it also buys more time to find a replacement.