ABS – Page 36 – Digital Finance Analytics (DFA) Blog

Household Debt Grinds Higher

The ABS published some revisions to their Household Income and Wealth statistics.

Two data series stood out for me. First, more households are in debt today, compared with 2005-6, and second more households have debts at more than three times their income.

Here is the plot of the proportion of households with debt, by income quintile. In 2003-4, 72.9% of all households had debt, and this rose to 73.6% in 2015-16, up 0.7% across the series.

But, those on lower incomes have borrowed harder, with 50% in the bottom income range borrowing, compared with 44.6% in 2003-4, a rise of 5.4%. The second lowest saw a rise of 2.2%, up from 64.5 to 66.7. On the other hand, the highest quintile saw a fall from 91.8% in 2003-4 to 89.2% in 2015-16, down 2.6%.

The ABS also said that in 2005-6 the proportion of households with debt more than three times income was 23.9%, while in 2015-16 it was 27.2%, up 3.3%.

This underscores the issue we face, debt is higher, and more lower income families are more stretched. Sure, net worth may be higher now, but the debt (mostly mortgage debt) is the problem. As we saw last week, most of the growth in wealth is associated with home prices. Should they reverse, then this looks very wobbly.

CPI and Uncertainly

Interesting speech from RBA’s Guy Debelle, highlighting issues around measuring an number of economic factors. He calls out CPI as one area of uncertainly, especially as the ABS does a quarterly report (unlike many other countries who publish monthly) and the changes in weightings which will impact ahead. There is a lot of noise in the data…!

For inflation – which is also published quarterly in Australia – we won’t get an official read on the current rate until the December quarter Consumer Price Index (CPI) is released in late January, three months from now. In most other countries, the CPI is published monthly, so the wait to get an assessment on current inflation is not so long elsewhere.

More timely and more frequent estimates of output and inflation are not unambiguously desirable. There is clearly a trade-off between timeliness and accuracy. But, in the case of inflation, a more frequent estimate would help to identify changes in the trend in inflation sooner; it probably comes with more noise, but we have ways to deal with that. Any reading on inflation always contains varying degrees of signal and noise about the ‘true’ inflation process. At the moment, we need to wait three more months to gain a better understanding as to whether any particular read on inflation is signalling a possible change in trend or is just noise. That is one of the reasons why the RBA has long advocated a shift to monthly calculation of the CPI.

That said, we do not depend solely on GDP and the CPI to assess the current state of the economy. We spend a lot of time and effort piecing together information from a large number of other sources. These include higher frequency and more timely data, including from the ABS, but also from a wide range of other data providers. The information we obtain from talking to people, particularly through our business liaison program, is also invaluable.

The question then arises as to how we can filter the information we receive from all these different sources to gain an overall picture about inflation and the state of the overall economy. Take GDP as an example. Some of the data released before the national accounts, such as monthly retail sales and international trade, feed directly into the calculation of GDP. So we have a direct read on those. We ‘nowcast’ other components of GDP using data that are more timely. Let me illustrate for household consumption. We get a good measurement of consumption of goods by looking at monthly retail sales and sales of motor vehicles and fuel. But there is very little timely information on household consumption of services, so the nowcast of this component relies more on statistical relationships. Some of these relationships are pretty weak, so we also supplement this with information on sales from our regular discussions with our business liaison contacts. This then gives us an estimate of consumption for the quarter. To get a preliminary nowcast for GDP growth for the quarter, we aggregate our best estimate for each of the relevant components. We then ask ourselves whether this estimate is consistent with other information that we have, such as the monthly labour market data, as well as predictions from our macro forecasting models.

The nowcast can be then updated with new information as it comes to hand. That said, my observation from a couple of decades of forecasting is that your first estimate of GDP (three months out) is often the best, and that additional information is often noise rather than signal.

Measurement uncertainty

Aside from when data are published, uncertainty about the present also arises from how things are measured. This takes two forms. First, there is the methodology used to actually measure the variable in question. Second, there are the revisions to data after they were first published.

On the first, a good example is the CPI. The CPI measures prices for a large number of items purchased by households. When aggregating these to calculate the overall consumer price index, each item is assigned a weight based on its average share of household expenditure. That is, the aim is to weight each price by the amount households spend on it, on average, in the period in question.

Obviously, these weights can change through time. But the weights used in the CPI are only updated each time the ABS conducts a Household Expenditure Survey, which, in recent times, has been every five or six years.

In between each household expenditure survey, a number of things can happen. First of all, some new goods and services can come along that weren’t there before. One example you might think of is a mobile phone. Though it’s not quite that straightforward, as before mobile phones, households spent money on landline phone bills and on cameras. So often these ‘new’ goods are providing similar services to something that was there before. Nevertheless, the ABS needs to take account of these new goods coming in, as well as some old items dropping out.

Secondly, households adjust their spending in response to movements in prices and income. In practice, households tend to substitute towards items that have become relatively less expensive, and substitute away from items that have become relatively more expensive. But the expenditure weights in the CPI are only updated every five or six years. Over time, the effective expenditure weights in the CPI become less representative of actual household expenditure patterns. That is, they are putting more weight on items whose prices are rising than households are actually spending on them. This introduces a bias in the measured CPI – known as substitution bias – which only is addressed when the expenditure weights are updated. Because households tend to shift expenditure towards relatively cheaper items, infrequent updating of weights tends to overstate measured CPI inflation.

The ABS will very shortly update the expenditure weights in the CPI. Because of substitution bias, history suggests that measured CPI inflation has been overstated by an average of ¼ percentage point in the period between expenditure share updates. While we are aware of this bias, we are not able to be precise about its magnitude until the new expenditure shares are published, because past re-weightings are not necessarily a good guide. It is also not straightforward to account for this in forecasts of inflation. However, from a policy point of view, the inflation target is sufficiently flexible to accommodate the bias, given its relatively small size.

Going forward, the ABS will update the expenditure shares annually, rather than every five or six years. This will reduce substitution bias in the measured CPI.

National Accounts 2016-17 Highlights Reliance On Property

The ABS released their National Accounts for 2016-17. Overall, we see why the RBA cut rates to let property prices run hot. Without property, the economy would have been shot. But of course, getting back on a more even keel is now much more difficult and much of household wealth is attached to inflated property prices; and rates are likely to rise.

In summary:

growth was 2%, the lowest since 2008-9
wages rose 2.1%, the weakest since 1991-2
household consumption was the strongest growth driver at 1.22pp
growth in household expenditure as measured in current price terms was 3.0%, the lowest on record
the household saving ratio was at its lowest point (4.6%) in nine years
households borrowed an additional $990 billion over the 10 year period from 2006-07, mainly mortgages
the value of land and dwellings owned by households increased by $2,930 billion over the same period
land and dwellings owned by households increased by $621 billion through 2016-17
despite slow wage growth, household gross disposable income plus other changes in real net wealth increased $456.6 billion, or 32.6%, in 2016-17, largely due to a $306.5 billion appreciation in the value of land held by households.

Here is the ABS summary data:

The Australian economy expanded by 2.0% in chain volume terms in 2016-17. This is the 26th consecutive year of economic growth, but the lowest rate of growth since 2008-09.

Optimal growing conditions saw the agriculture industry make a robust contribution to economic growth, largely on the back of a bumper wheat crop and higher meat sales, which returned the highest annual income to farmers on record. Mining was the beneficiary of elevated commodity prices, but the industry’s growth in volume terms was subdued. Most of the expansion in mining came from oil and gas extraction, reflecting additional capacity coming online. Service-based industries also contributed to growth, highlighting the economy’s transition to service delivery.

Household consumption expanded moderately in volume terms. Gross fixed capital formation fell for the fourth successive year, albeit only marginally, despite continuing strength in dwelling investment in 2016-17. New engineering construction continued to slide as the impact of the recent mining construction boom fades.

Weak wage growth resulted in compensation of employees rising 2.1%, the weakest annual rise since 1991-92. This, combined with a fall in social assistance benefits received by households during the year, caused the household saving ratio to fall to 4.6%, its lowest level since 2007-08.

Price pressures in the domestic economy remained weak throughout 2016-17. Subdued domestic prices and wages drove the weakest annual rise in household consumption, in current price terms, on record. The terms of trade grew for the first time in 5 years, reflecting elevated prices received for key export commodities such as coal and iron ore. These prices boosted mining company profits, real net national disposable income, and overall export revenues, which sharply narrowed the current account deficit.

The Australian economy’s overall financial position improved during 2016-17, borrowing less in net terms from the rest of the world in any year since 2001-02. In current prices Australia’s net worth at 30 June 2017 is estimated at $11,377 billion.

AUSTRALIAN ECONOMY GROWS BY 2.0%

Australian Gross Domestic Product (GDP) grew by 2.0% in the 2016-17 year. This represents a 0.1pp upward revision from the annualised 2016-17 GDP estimates published in the June quarter national accounts. GDP per capita increased 0.4% as the Australian population grew by 1.5%.

GDP and GDP per capita, Volume measures

CONSUMPTION DRIVES ECONOMIC GROWTH IN 2016-17

Economic growth in 2016-17 was largely driven by consumption. Government consumption contributed 0.8pp to GDP growth, while household consumption contributed 1.2pp to growth. Gross fixed capital formation made no contribution to growth, with the impact of public sector capital expansion being cancelled out by the decline in private works. Net exports contributed 0.1pp.

CONTRIBUTIONS TO GDP(E) GROWTH, Volume measures

Contributions may not add to GDP growth due to the statistical discrepancy.

HOUSEHOLD CONSUMPTION WEAK IN CURRENT PRICE TERMS

While household consumption contributed solidly to GDP growth in volume terms, growth in household expenditure as measured in current price terms of 3.0% is the lowest on record.

HOUSEHOLD FINAL CONSUMPTION EXPENDITURE, Current prices

MINING INVESTMENT CONTINUES TO FALL

In 2016-17, mining investment fell by 23.7%. This was the fourth consecutive fall in mining investment, with the level of investment now 58.1% lower than it was in 2012-13. The impact the fall in mining investment has had on GDP has been partially offset by investment in dwellings, which grew 5.2% in 2016-17.

Private sector gross fixed capital formation for non-mining industries grew 2.2% in 2016-17. Investment in non-mining is 15.1% higher than in 2012-13, with the strength being led by the information, media and telecommunications industry.

PRIVATE CAPITAL INVESTMENT, Current prices

SERVICES AND AGRICULTURE DRIVE GROWTH IN 2016-17 AS THE COMPOSITION OF AUSTRALIAN GROSS VALUE ADDED (GVA) CONTINUES TO SHIFT

In 2016-17, good growing conditions resulted in a large increase in the output of the Agriculture industry, contributing 0.4 percentage points to the yearly GDP growth in chain volume terms, the largest contribution from Agriculture in ten years. Health Care and Social Assistance, Professional Scientific and Technical Services and Financial and Insurance Services industry all contributed at least 0.3 percentage points to GDP growth this year.

This is consistent with the longer term trend being observed with these three industries along with Mining and Construction making up the largest share of the overall economy in 2016-17. This is in contrast to the 1996-97 year in which Manufacturing, Financial and Insurance Services and Public Administration and Safety were the top three contributors.

INDUSTRY SHARES OF GVA – Selected industries, Current prices

GVA at basic prices of industries as a proportion of total GVA at basic prices

COMPENSATION OF EMPLOYEES SHARE OF TOTAL FACTOR INCOME FALLS

In 2016-17, the compensation of employees (COE) share of total factor income fell to 52.8%. This share is still higher than the lowest level recorded, but continues the long term decline from 57.1% in 1984-85. The series has been more volatile in the past 7-8 years with swings in the terms of trade impacting overall factor income.

The profit share (based on gross operating surplus) of total factor income was 26.5% for the 2016-17 year. This increase is due to the higher profits received by the mining industry this year due to the increase in the terms of trade. The current year share is less than the peak of 28.9% in 2008-09 but still higher than the 22.0% share observed in the mid-1980s. The profit share of total factor income should not be interpreted as a direct measure of ‘profitability’ for which it is necessary to relate profits to the level of capital assets employed.

WAGES SHARE OF TOTAL FACTOR INCOME

PROFITS SHARE OF TOTAL FACTOR INCOME

CHANGES TO INDUSTRY COMPENSATION OF EMPLOYEES OVER TIME

The industry share of COE has changed significantly over time. The Health Care and Social Assistance and Professional, Scientific and Technical Services industries had the largest proportion of total COE in 2016-17. The Manufacturing industry made up the highest share of COE in 1996-97 but this share has now fallen to 7.3%.

INDUSTRY SHARES OF COE – Selected industries, Current prices

HOUSEHOLD SAVING RATIO DECLINES

The household saving ratio was at its lowest point (4.6%) in nine years in 2016-17. This fall in net saving as a proportion of net disposable income can be attributed to slower growth in COE as well as a reduction in social assistance benefits received. The result this year is not isolated, and continues the downward trend seen in the past five years.

HOUSEHOLD SAVING RATIO

GDP CHAIN PRICE INDEX GROWTH DRIVEN BY STRONG EXPORT PRICES

The GDP chain price index grew by 3.8% in 2016-17. Strength in export prices (specifically coal and metal ore) drove this result. The domestic final demand chain price index rose 0.8% in 2016-17, which is the lowest reading of domestic price pressure since 1996-97.

CHAIN PRICE INDEXES

MARKET SECTOR MULTIFACTOR PRODUCTIVITY INCREASES

Market sector multifactor productivity (MFP) grew 0.6% in 2016-17. This result reflects a 1.9% increase in GVA and a 1.3% increase in labour and capital inputs. On a quality adjusted hours worked basis, MFP rose 0.3%, reflecting changes in labour composition. These changes were due to educational attainment and work experience.

On an hours worked basis, labour productivity grew 1.0%. On a quality adjusted hours worked basis, labour productivity grew 0.5%.

MARKET SECTOR PRODUCTIVITY, Hours worked basis

LOW INTEREST RATES ENTICE HOUSEHOLDS TO INVEST IN DWELLINGS AND LAND

Interest rates have been at historically low levels for a number of years, which has reduced the pressure on households in terms of the proportion of income spent paying interest on mortgages. Interest on dwellings accounted for 3.7% of total gross household income in 2016-17, compared to 5.3% in 2006-07.

Households borrowed an additional $990 billion over the 10 year period from 2006-07, while the value of land and dwellings owned by households increased by $2,930 billion over the same period. Land and dwellings owned by households increased by $621 billion through 2016-17, boosted by the recent additions in dwelling stock.

In 1988-89, the value of dwellings and land held by households was 5.1 times the value of household borrowing. By 2006-07 this ratio was at 3.3, and it has been reasonably stable since. In 2016-17, land and dwellings owned by households covered their borrowing 3.1 times.

HOUSEHOLD INTEREST PAYABLE ON DWELLINGS – Relative to total gross household income, Current prices

HOUSEHOLD LAND AND DWELLING ASSETS – Relative to loans, Current prices

HOUSEHOLD INCOME AND WEALTH

Despite slow wage growth, household gross disposable income plus other changes in real net wealth increased $456.6 billion, or 32.6%, in 2016-17. This was largely due to a $306.5 billion appreciation in the value of land held by households.

Living standards and economic wellbeing are supported by wealth as well as income. Gross disposable income grows at a fairly constant rate over time, but its rate of growth has slowed in recent years. However, households reap gains and incur losses from holding assets, such as land, dwellings, equities and accumulated saving, which also bears on consumption patterns.

HOUSEHOLD INCOME AND WEALTH, Current prices

CPI Higher In September

The Consumer Price Index (CPI) rose 0.6 per cent in the September quarter 2017, the latest Australian Bureau of Statistics (ABS) figures reveal. This follows a rise of 0.2 per cent in the June quarter 2017.

The most significant price rises this quarter are electricity (+8.9%), tobacco (+4.1%), international holiday travel and accommodation (+4.1%) and new dwelling purchase by owner-occupiers (+0.8%). These rises are partially offset by falls in vegetables (-10.9%), automotive fuel (-2.3%) and telecommunication equipment and services (-1.5%).

The CPI rose 1.8 per cent through the year to September quarter 2017 having increased to 1.9 per cent in the June quarter 2017.

Chief Economist for the ABS, Bruce Hockman, said “Utilities prices rose strongly in the September quarter 2017. The most significant rises relate to electricity and gas prices, with increases in wholesale prices being passed on to consumers. Increases in wholesale prices have been observed across the National Electricity Market (NEM), with the most significant rises this quarter in electricity being observed in Adelaide; Sydney; Canberra and Perth.”

Trend unemployment rate lowest in 4 years

The monthly trend unemployment rate has decreased by 0.2 per cent over the past year to 5.5 per cent in September 2017, according to figures released by the Australian Bureau of Statistics (ABS) today. This is the lowest rate seen since March 2013 and reflects the strength in employment growth over the past 12 months.

But it is worth noting the underemployment trend rate (proportion of employed persons) rate still does not look that flash, especially in TAS, SA and WA.

“The trend unemployment rate had been hovering in the range of 5.6 to 5.8 per cent for almost two years, but has now dropped to a four year low of 5.5 per cent,” the Chief Economist for the ABS, Bruce Hockman, said.

The trend monthly unemployment rate for both males and females dropped to 5.5 per cent, also for the first time since March 2013.

The trend participation rate remained steady at 65.2 per cent. The male participation rate was 70.8 per cent, while the female participation rate reached a record high of 59.9 per cent.

Monthly trend full-time employment increased for the 12th straight month in September 2017. Full-time employment grew by a further 16,000 persons in September, while part-time employment increased by 8,000 persons, underpinning a total increase in employment of 24,000 persons.

“Full-time employment has now increased by around 271,000 persons since September 2016, and makes up the majority of the 335,000 person net increase in employment over the period,” Mr Hockman said.

Over the past year, trend employment increased by 2.8 per cent, which is above the average year-on-year growth over the past 20 years (1.9 per cent).

Over the past year, the states with the strongest annual growth in employment were Queensland (4.1 per cent), Tasmania (3.9 per cent), Victoria (3.1 per cent) and Western Australia (2.9 per cent).

The trend monthly hours worked increased by 3.1 million hours (0.18 per cent), with the annual figure also showing strong growth (2.9 per cent).

Trend series smooth the more volatile seasonally adjusted estimates and provide the best measure of the underlying behaviour of the labour market.

The seasonally adjusted number of persons employed increased by 20,000 in September 2017. The seasonally adjusted unemployment rate decreased by 0.1 percentage points to 5.5 per cent and the labour force participation rate remained steady at 65.2 per cent.

Finance Overall Lifted Again In August

The ABS released their final piece of the finance jig-saw today, Lending Finance to August 2017. As normal we look at the trend data, which smooths out some of the statistical bumps.

Total credit lifted again, in flow trend terms, up 0.2%.

Investment mortgage flows were up 0.2% (flat in Sydney, and still rising in Melbourne) and made up 10.2% of all credit, the same as last month. Lending for other commercial purposes rose 0.5% while revolving commercial credit fell 1.7%. Lending for personal finance rose 0.5%, as households reach for more credit to assist their cash flows.

The total value of owner occupied housing commitments excluding alterations and additions rose 0.9% in trend terms.

The trend series for the value of total personal finance commitments rose 0.5%. Revolving credit commitments rose 0.8% and fixed lending commitments rose 0.4%.

The trend series for the value of total commercial finance commitments was flat. Fixed lending commitments rose 0.4% while revolving credit commitments fell 1.7%.

The trend series for the value of total lease finance commitments rose 1.5% in August 2017 while the seasonally adjusted series fell 0.6%, following a 6.8% fall in July 2017.

Households Spending Less On Housing…But

Data from the ABS today – Housing Occupancy and Costs – highlights the average household with an owner occupied mortgage is paying around $450 a week, slightly lower than the peak a couple of years ago. This equates to around 16% of gross household income, on average.

This does not include repayments on investment properties of course (and many households have multiple properties as investing in property rises).

But of course, the true story is interest rates have fallen to all time lows, allowing people to borrow more, as prices rise. As a result, should interest rates start to bite, this will cause real pain. Then of course we have recent flat wage growth, in real terms, in the past couple of years.

Also, households have a bigger mortgage for longer, which is great for the banks, but not helpful from a household perspective, as it erodes savings into retirement and more older Australians are still borrowing. And of course the current high home prices show a paper profit, but that could be eroded if prices slide.

Thus, the ABS data should not be interpreted as everything is fine, it is not! In fact, underwriting standards should be much tighter now, as we highlighted this morning, Australian Banks are willing to go up to around 6 times income, higher than many other countries, with similar home price bubbles.

The proportion of income mortgagees are using for housing has declined over the last decade, according to new figures released today by the Australian Bureau of Statistics (ABS).

“In 2005-06, owners with a mortgage paid 19 per cent of their total household income on housing costs. By 2015-16 this had fallen to 16 per cent. This is likely driven by lower interest rates coupled with growth in household incomes over the last decade, ” Dean Adams, Director of Household Characteristics and Social Reporting, said.

In 2005-06, owners with a mortgage paid $434 per week in housing costs, similar to the $452 paid in 2015-16 in real terms. But over the same period, average total household incomes for mortgagees rose from $2,272 to $2,759 per week.

“Mortgage and property values have also increased in the last decade. Ten years ago, the real median mortgage value was $171,000 which rose to $230,000 in 2015-16. Meanwhile, the real median dwelling value increased from $449,000 to $520,000,” Mr Adams explained.

Going back another decade, the results also reveal that households are entering into a mortgage at older ages. The proportion of younger households (with a reference person aged under 35 years) represented 69 per cent of first home buyers in 1995-96 which dropped to 63 per cent by 2015-16.

“Having a mortgage is now the most common form of ownership for households whose reference person was aged between 35 and 54 years. Among this group, ownership with a mortgage increased by 15 percentage points over the last two decades, from 41 per cent to 56 per cent. Meanwhile, the rate of outright ownership in 2015-16 (12 per cent) was one-third the 1995-96 rate (36 per cent),” Mr Adams said.

The rate of older households (with a reference person aged 55 years and over) who were still paying off a mortgage has tripled between 1995-96 and 2015-16 (from 7 per cent to 21 per cent). Older households are spending more of their income on housing costs than two decades ago, increasing from 8 per cent to 14 per cent for those aged between 55 and 64, and from 5 per cent to 9 per cent for those aged 65 and over.

First Time Buyers Lead Housing Finance Higher In August

Data from the ABS today on housing finance reconfirms what we already knew, overall lending flows for housing from the ADI’s rose 0.6% in trend terms or 2.1% seasonally adjusted. Within that, lending for owner occupied housing rose 0.9%, or 2.1% seasonally adjusted and investor loans rose 0.2% in trend terms, or a massive 4.3% in seasonally adjusted terms. So lending growth is apparent, and signals more household debt ahead.

First time buyers continue to extend their reach, despite we seeing “Peak Price” for property at the moment. In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments rose to 17.2% in August 2017 from 16.6% in July 2017. But these numbers may be wobbly, as the ABS warns:

The number of loans to first home buyers increased strongly in August. The ratio of the number of first home buyer loans to the total number of owner occupier loans also increased strongly. The increase has been driven mainly by changes to first home buyer incentives made in July by the New South Wales and Victorian governments. The ABS is working with financial institutions to establish the size of the increase in first home buyer lending in recent months. These numbers may be revised and users should take care when interpreting recent ABS first home buyer statistics. The ABS is continuing to work with APRA and the financial institutions to improve the quality of first home buyer statistics.

The number of investor first time buyers fell a little according to our surveys, but overall there are more active, thanks to the recent owner occupier incentives.

The overall lending flows, in trend terms revealed a rise in all categories, other than lending for new construction to investors, which fell just a little. Also refinanced loans only grew a little and continues to slide as a proportion of all loans. No real surprise as rates are rising now. The mix of loans also continues to pivot away from investment property, down to 44.8% of all loans (ex. refinance). Still a high number though.

Here are the month on month movements by category.

Looking at the original stock data, another $6.5 billion was added to the owner occupied category or 0.6%, while investor loans rose just 0.1% in the month.

The portfolio mix of investment loans drifted lower overall, down to 34.6% or $550 billion, while the total value of owner occupied loans stood at $1.1 trillion.

Residential Construction Rotates

The latest data from the ABS shows building construction activity to June 2017. We see a small rotation towards non-residential work, supported by investment from the public sector. The trend estimates, which irons out the bumps in the series, shows a rise in total building work done, with a fall in residential building of 1.2% and a rise in non-residential building of 2.8%.

Within the residential data, new houses fell 1.3% and other new residential building fell 1.0%.

The trend estimate of the value of total building work done rose 0.3% in the June 2017 quarter.

The trend estimate of the value of new residential building work done fell 1.2% in the June quarter. The value of work done on new houses fell 1.3% while new other residential building fell 1.0%.

The trend estimate of the value of non-residential building work done rose 2.8% in the June quarter.

The trend estimate for the total number of dwelling units commenced fell 3.0% in the June 2017 quarter following a fall of 2.8% in the March quarter.

The trend estimate for new private sector house commencements fell 1.6% in the June quarter following a fall of 2.7% in the March quarter.

The trend estimate for new private sector other residential building commencements fell 4.6% in the June quarter following a fall of 3.0% in the March quarter.

Retail Turnover On The Slide

More evidence of strained household budgets with the release today of the August 2017 ABS data on Retail Turnover.

Australian retail turnover fell 0.6 per cent in August 2017, seasonally adjusted, according to the latest Australian Bureau of Statistics (ABS) Retail Trade figures. This follows a fall of 0.2 per cent in July 2017.

In seasonally adjusted terms, there were falls in food retailing (-0.6 per cent), cafes, restaurants and takeaway food services (-1.3 per cent), household goods retailing (-1.0 per cent) and clothing, footwear and personal accessory retailing (-0.2 per cent). There were rises in department stores (0.7 per cent) and other retailing (0.1 per cent) in August 2017.

In seasonally adjusted terms, there were falls in all states and territories. “Victoria (-0.8 per cent) and Queensland (-0.8 per cent) led the falls,” said Ben James, Director of Quarterly Economy Wide surveys.

“There were also falls in New South Wales (-0.2 per cent), Western Australia (-0.6 per cent), South Australia (-0.6 per cent), the Australian Capital Territory (-0.8 per cent), Tasmania (-0.7 per cent) and the Northern Territory (-0.7 per cent).”

The trend estimate which irons out the bumps was a little more sanguine, with retail turnover rising 0.1 per cent in August 2017 following a 0.1 per cent rise in July 2017. Compared to August 2016, the trend estimate rose 2.8 per cent.

Some significant state variations, but overall direction is clearly down.

Online retail turnover contributed 4.6 per cent to total retail turnover in original terms.

More evidence of stressed household budgets, which is no surprise given the current economic settings.