The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Tuesday, July 31, 2012

Building approvals smash expectations: +10.2% y/y vs. consensus of -5.5% y/y (chart)

A nice positive surprise today with the building approvals (first chart), especially, and private credit data. At the margin, this information further reduces the already slim possibility of an August rate cut.

On the approvals data, Merrills comments:

Approvals have remained surprisingly high this month, however, this is likely to be temporary with developers looking to avoid changes to first home buyer regulations that came in at the end of June. This pulling forward of approvals into May and June will likely see growth in the next few months be fairly weak, despite rate cuts, before recovering modestly late in the year. That said levels of approvals in the June quarter should be enough to turn around what were decade lows in housing commencements in the March quarter.

We are also seeing a solid recovery in business credit, which until recently had been contracting. In this context, the RBA reports:

Business credit increased by 0.5 per cent over June, after growing by 0.8 per cent over May. Over the year to June, business credit increased by 4.4 per cent.

Housing credit growth was modest in June at +0.3%, although it continues to expand on a year-on-year basis at a rate in line with incomes. More from the RBA:

Housing credit increased by 0.3 per cent over June, following an increase of 0.3 per cent over May. Over the year to June, housing credit rose by 5.1 per cent.