Australia December Home-Building Permits Unexpectedly FallMichael Heath
Australian home-building approvals unexpectedly declined for the second time in three months in December and help-wanted notices dropped, underscoring a weaker domestic economy.
The number of permits granted to build or renovate houses and apartments fell 4.4 percent from November, when they rose a revised 3.4 percent, the Bureau of Statistics said in Sydney today. Job advertisements dropped for an 11th month in January, capping the worst skid since the 2009 global recession.
The local currency declined initially as investors edged up wagers that the Reserve Bank of Australia will lower interest rates tomorrow. Governor Glenn Stevens and his board reduced the overnight cash-rate target to 3 percent in December, matching a half-century low, as they try to revive industries including construction to rebalance economic growth and extend 21 recession-free years.
“Interest rates cuts aren’t getting traction with potential home owners,” said Joshua Williamson, a senior economist at Citigroup Inc. in Sydney who is among a minority forecasting the RBA will lower borrowing costs tomorrow. “Households have become less sensitive to interest rates so we’re calling for further reductions in borrowing costs. The trend now suggests that employment growth will start to slow.”
The local dollar traded at $1.0427 at 12:51 p.m. in Sydney from $1.0428 before the release. Traders are pricing in a 21 percent chance the RBA will cut rates to a record-low 2.75 percent tomorrow, according to swaps data compiled by Bloomberg, up from 18 percent before the release.
Job advertisements fell 0.9 percent in January, after declining a revised 2.8 percent in December, an Australia & New Zealand Banking Group Ltd. report showed today.
Australia’s jobless rate rose in December as the nation posted its worst back-to-back years of job growth since the 1997 Asian financial crisis. Unemployment climbed to 5.4 percent as the number of workers fell by 5,500 in the month.
The level probably rose to 5.5 percent in January, matching the highest since April 2010, according to the median estimate in a Bloomberg News survey ahead of the government’s monthly employment report Feb. 7.
Home-loan growth in December dropped to the weakest annual pace since records began in 1977, central bank data showed Jan. 31.
The central bank lowered rates by 1.75 percentage points between November 2011 and December last year.
Building approvals in December advanced 9.3 percent from a year earlier, today’s report showed. That compares with economists’ forecast for a 14.9 percent rise year-over-year.
Approvals to build private houses fell 3.3 percent to 7,213 in December from the previous month, the report showed. Approvals for apartments and renovations declined 5.4 percent to 5,347.