Statistics Count - September 2019

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September 2019

Forward

Jim Houghton
Statistics and Economics Manager

Despite real GDP growth in June Quarter RBA Governor Philip Lowe remains upbeat. Commenting in a recent speech that “there are signs the economy has reached a gentle turning point”. Some of the positives mentioned include the impact from lower interest rates, recent tax cuts, depreciation of the Australia dollar and stabilisation of housing markets. Also housing finance is expanding and First Home Buyers are active. We have also seen some major players in housing construction report positive views with Brickworks indicating that “the bottom has passed in the housing cycle”. However this is tempered by lower housing approvals (but at a slower rate of decline) impacting softwood timber sales. Imports volumes are also easing with price levels declining at a lesser rate. All of these stories are covered in more detail below.

Top 5 Statistics

1.4%

(GDP seasonally adjusted year-ending June 2019 compared with 3.0% year-ending June 2018)

2,819,381m3

(FWPA Softwood data series annual timber sales a decrease of -11.3% over the year ending Aug 2019)

181,014

(Dwelling approvals year-ending July 2019 down from 230,606 year-ending July 2018 a change of -21.5%)

5.925 million m3

(NZ log exports for Qtr 30 June 2019 an increase of +9.3% on the previous quarter)

747,649 m3

(Imports of softwood sawnwood HTISC 4407.1 a decrease of-3.6% over the year ending July 2019)

Housing approvals down 21.5% YE July

The downturn in residential dwelling approvals continued in July, with monthly approvals falling 2.6% compared with June. On a year-end basis, approvals for all dwellings were down 21.5% on a year earlier, totalling 181.014 separate approvals. The most populous states – New South Wales and Victoria – experienced total falls of 22.3% over the course of the year. Building supplies businesses and economic commentators appear to differ on the likely direction of the housing market over the next year or more.

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Housing finance turns up… and why interest rates will remain lower

Lending for housing finance expanded 5.1% in July 2019, compared with the prior month, lifting to AUD17.896 billion as lending to Owner Occupiers lifted by 5.3% to AUD13.253 billion. The value of loans to investors also rose, but by a more muted 4.7%, as commentators argued over the extent to which the successive interest rate cuts were responsible for the lending increase.

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Softwood sales down ninth successive month

Annualised sales of domestically produced sawn softwood products declined for the ninth consecutive month in August 2019, slipping to 2.819 million m3, down 11.3% on the year-ended August 2018. Monthly sales in August totalled 240,425 m3, down almost 21% on August 2018 and 3.2% lower than July.

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Packaging grade sales up 4.1% - off the chart (literally)

Sales of domestically produced softwood Packaging grades lifted 4.1% over the year-ended August 2019, totalling 570,874 m3. The result has quite literally pushed the annualised line off the chart, with the Packaging grade the only significant sawn softwood product to experience growth over the year.

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Sawn softwood imports softening as prices hold to fundamentals

Despite being significantly lower than a year earlier, Australia’s imports of sawn softwood products recovered ground in July compared with June’s decadal low import volume. At 45,589 m3, July’s imports were almost exactly 50% higher than June’s long-term monthly low of 30,413 m3. However, annualised imports were 4.4% lower in July 2019 than for the prior month, falling to 747,649 m3. Import prices appear to be making an orderly adjustment to the reduced import volumes.

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NZ Harvest & Exports Hit Records

New Zealand’s total log harvest in 2018-19 was 34.822 million m3, a rise of 5.4% on the prior year, as harvest of Export Logs lifted 11.8% to a record 22.736 million m3. As a proportion of the total, Export log extraction lifted to a record high of 65.3% as Saw Log removals declined to 22.7% of the total harvest.

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Plunging economic growth: thank goodness for exports and Government spending

Annualised economic growth – measured by Gross Domestic Product (GDP) – stumbled through to a seasonally adjusted 1.4% in 2018-19, with June Quarter economic growth staggering to 0.5%, assisted primarily by Government expenditure. Despite brave efforts to talk the result up, the reality is that Australia’s economic growth has rarely been worse, and certainly has not been this poor since 2001.

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Number of employed up 2.5% year-ended August

In August 2019, 12.926 million people were employed in Australia, up 2.5% on a year earlier and with 34,700 more people in work than a year earlier. At the same time, the number of unemployed people totalled 716,800, a rise of 2.2% on the prior year. That fed into an unemployment rate of 5.3% in August, up from 5.2% one year ago.

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