Statistics count - April 2019

FWPA - Statistics Count Newsletter

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April 2019

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Jim Houghton
Statistics and Economics Manager

This edition of Statistics Count has been tagged ‘the little ray of sunshine’ edition. Although the storm clouds are brewing on the Australian economy’s horizon, there is some good news for several important measures for our industry. Softwood sales are up, imports are easing and overall prices appear stable. Plus monthly housing finance has been positive. Even retail sales were better than expected.
That doesn’t mean the economy is out of the woods. Slumping inflation, serious household debt challenges and the continuation of underemployment all point to an economy that is under-performing in key areas.
So as winter sets in, the clouds are forming, but there’s just the hint of sunshine poking through.

Top 5 Statistics

2.7%
(Month on Month increase in housing finance Feb 2019 annual percentage decline easing)
$8.99 billion
(Alterations and Additions year-ending Dec 2018 a change of +4.42% compared to compared to period Dec 2017)
203,622
(Housing approvals Year-ending Feb 2019 down -10.1% on Feb 2018)
50,821m3
(Imports HTISC 4407.10 Softwood Sawnwood month of February a MoM decline of 27.7%)
231,886m3
(FWPA softwood sales data series sales for the month of February a MoM increase of 21.2%)

Softwood sales hold their own – up 21.2% in February
Sales of locally produced sawn softwood products totalled 231,886 m3 in February 2019, a lift of 21.2% on the prior month. Although January is always a quiet month and thus is relatively easily bested, the February sales data fed into annualized sales totalling 3.035 million m3 for the year, a decline of just 3.3% on a year earlier.
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Import prices stable as volumes dip
Australia’s sawn softwood import volumes dipped in February 2019, sliding to 50,821 m3, almost 28% lower than in January and a solid 18.7% lower than in February 2018. After more than a year of solid month-on-month import growth, the last two months have seen imports back right of, as significant inventories continue to work their way through the Australian market.
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Dwelling approvals down 10.1% year-ended February, but houses just 2.7% softer
Listen to some pundits and housing cycles are impacted dramatically by events like elections. Others are less certain, preferring to stick to the known annual cycles. Most of us resist the temptation to ‘day trade’ the housing data – preferring to analyse annual trends for what are often the culmination of years long decision making. That is why Australians are really taking notice now dwelling approvals are down 10.1% (year-ended February) and at 203,622 separate approvals, are headed down below 200,000 per annum for the first time since July 2014.
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State versus State – Dwelling Approvals Head South
It is just possible that your attitude and perception to the state of the housing market depends a great deal on the state in which you reside. But in general, the further South you go in Australia, the better the new dwelling approvals look. The national decline in approvals over the last year may be 10.1%, but head to Tasmania and they are up 13.4%.
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Housing finance boost is welcome news
Small it may be, but February’s rise in the value of housing finance is very welcome news. It may be too soon, but with the total value of loans up 2.7% on January’s low, it is conceivable that housing finance has turned the corner. Feeding into total loan growth, all major groups saw the value of loans increase, and annualized declines also appeared to turn the corner.
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Zero inflation! And interest rates are headed there too
Australia’s core inflation was an annualized 1.4% over the year-ended March 2019, but headline inflation was a disastrous 0% in the March quarter. The result was all the more challenging because several non-discretionary categories saw large increases, while most discretionary items experienced lower prices over the quarter. Regardless, the latest inflation rate news was met by an immediate expectation that in May, Australia’s official interest rate would be reduced to an historic new low.
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Have retail sales turned the corner?
Modest though it may be, the 0.8% rise in Retail Sales recorded in February 2019 is very welcome news for a sector that has been under serious pressure for much of the last few years. Whether the rise – which contributed to a 3.1% annualized rise – can be sustained is a different question, but one that seems possible with a likely fall in interest rates and personal tax cuts expected to be in place before the end of the financial year.
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China to the rescue! Has real growth returned?
Always a little suspect, China’s economic growth was reported at 6.4%, year-on-year in the March quarter of 2019. Growth was above expectations and was driven by a solid increase in industrial output, as well as domestic consumption, feeding into renewed hope that the driver of global economic growth has turned the corner.
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New Zealand harvest remains near all-time highs as sawnwood production softens a little
Latest data shows that New Zealand’s total harvest remains at near record levels, while somewhat counter-intuitively, Sawnwood production has slumped. In 2018, the reported total harvest was up 6.1% on 2017, reaching 36.077 million m3, supported primarily by export log growth of 12.0%. Unsurprisingly, given softer sawnwood production, sawlog.
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