Statistics count - January 2019

FWPA - Statistics Count Newsletter

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January 2019

Forward

Jim Houghton
Statistics and Economics Manager

The new year is well underway with considerable speculation about the state of the economy. For our industry the data is showing continued easing in housing approvals although core segments such as detached homes are holding up well. Domestic softwood timber sales are down year on year. We have also seen a significant increase in import volumes. Part of a lag response to product shortages experienced in sections of the market during 2018. In the broader economy the interplay of household debt (record highs) and wages growth (record lows) is causing problems on the demand side. This has been compensated for in other areas such as public expenditure on infrastructure. Overall growth is forecast to still be positive although slightly lower at 2.6%.

Top 5 Statistics

1.8%
(CPI year-ending Dec 2018 original – headline with the quarterly seasonally adjusted change at 0.4%)
214,760
(Australian Dwelling Approvals down from 223,515 year ending Nov 2017 a change of -3.9%)
917,914m3
(Imports of coniferous sawnwood an increase of 58.8%on the year-ending Nov 2017)
3,057,003m3
(FWPA Softwood data series annual timber sales a decrease of -1.68% over the year ending Dec 2017)
15.4%
(Housing finance share of loans by $ value for First Home Buyers. A level not seen since Aug 2012)

Softwood sales down 1.7% in 2018 as December sales decline
Sure signs of the long awaited downturn continued in December, as reported domestic sales of sawn softwood products slumped 31.9% compared to the prior month and sales for 2018 fell 1.7% compared to 2017. Reported year-end sales totalled 3.057 million m3, while December’s reported volume of 151,985 m3 was the lowest monthly total since January 2013.
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Houses easing but multi-res crashing
Australia’s softening housing market continued its weakness in November 2018, with year-end approvals down 3.9% compared to a year earlier. All of the weakness is in the multi-residential arena, where all formats have recorded approvals declines. By contrast, the bedrock of the Australian housing economy: free-standing houses, are still showing annualised growth (1.4%), but that will not last long.
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Treading water or drowning? A mixed bag of economic data
Jim Houghton, FWPA’s Statistics & Economics Manager provides a broad scan of the outlook for the Australian economy over 2019
In ancient days the Greeks consulted the Oracle of Delphi for advice on the future. These days technology has enabled us to harness the wisdom of crowds but I am not sure we are any the wiser other than knowing what’s trending on YouTube. In my view the key to thinking about the future still remains the use of good data and the application of common sense.
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Recession risk rising
The risk of an Australian recession in the next two years is about one in four according to an influential survey of academics and economists. Curated by The Conversation, its initial economic survey addresses a wide range of topics. Here we will examine just the economic growth survey. Meanwhile, latest GDP figures show just how significant government expenditure is for maintaining positive economic growth.
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Low inflation is a modern curse. Dismal scientists despair
Economists are sometimes described as the dismal scientists. Perpetually capable of trawling up data that takes the gloss off joy and puts the boot into even modest failings. Thus it is with Australia’s inflation rate, which at an annualized 1.8% in the December quarter remains stubbornly below the nominal 2% to 3% per annum target set by the Reserve Bank of Australia.
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Softwood imports up 58% to 917,914
Imports of sawn softwood products lifted to a record 917,914 m3 over the year-ended November 2018. The rise of 58.9% compared with the prior year was dominated by structural grades, especially the main dressed grades.
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North American lumber prices to rise: market outlook
One way or another, the North American lumber market is significant to the market in Australia. Supplies from the US and Canada are one consideration, but more importantly, European supplies to Australia are tied to the fortunes of North America’s market. If nothing else, European suppliers configure their price expectations on the US market, whenever they are able to do so. US conditions contribute to import availability, supply and price.
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First home buyers muscling up – 15.4% of total loan value
Amidst the descending gloom in Australia’s housing market, there are of course bright spots that represent navigational beacons. Right now, it is difficult to bypass the role and importance of First Home Buyers. In November 2018, their share of total loan value lifted to a six year high at 15.4%, comfortably ahead of the long-term average of 13.5%, and trending up. In a market where the total value of housing loans (net of refinancing) was down 7.7% over the last year, this is one of the few sparks of guiding light.
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