We’ve had two releases from the Australian Bureau of Statistics (ABS) today which the ASX200 has largely ignored but which do give us ideas on where the future of the country is headed in the weeks and months ahead.
The first is Australia’s International Trade in Goods data for March 2024, released on Thursday.
The balance on goods decreased by $1.567B in March compared to February – but this doesn’t spell the whole story.
What we’re actually looking at is the lowest surplus on record since November 2020, which was the first year of COVID and around the time the world was getting plunged into lockdowns. Shipments increased only +0.1% compared to February, but an even more interesting statistic is what happened with exports.
Australian exports hit record highs in March of 2024, increasing +4.2% MoM to a value of $39.9B.
We get the next Federal budget on May 17, and Federal Treasurer Jim Chalmers has for months being warning Australians that lower iron ore prices and lower iron ore demand will hurt the Australian budget.
If the March data is anything to go by, that appears to be a prescient forecast.
Housing data and CPI hike risk
The second release we got from the ABS is March Building Approvals data.
Total dwellings approved +1.9% in March after a decline of -0.9% in February.
In January, that figure was even lower at -2.5% – meaning that YTD dwelling approval growth actually remains contractionary. The ABS was quick to point out, however, that private approvals climbed +3.8%.
“Approvals for private houses rose 3.8 per cent,” ABS construction stats chief Daniel Rossi said on Thursday – which omits that the growth rate in February was much higher, above +12%. This followed a January read of -9.9%.q
Private attached dwellings, meanwhile, increased +3.6% in March – the weakest read since 2012.
But it was commentary from Oxford Economics which underscores why Australia’s housing market risks keeping CPI inflation down under higher for longer.
“Total dwelling approvals are running at 161,527 annualised (original terms), a level well below what government is targeting as part of the Housing Accord,” Oxford Economics’ Senior Economist Maree Kilroy said.
“It’s been a soft start for dwelling approvals in 2024, with just 38,471 dwellings.”
The less dwellings Aussies have to live in (either residential or commercial) means that a supply shortfall drives prices higher.
The ABS can confirm this: “The average approval value for a new house continued its annual rise in March 2024, to $468,800 per house,” Rossi added.
The Bank of Queensland (ASX:BOQ) revealed earlier this week that house prices increased +9% YoY across the nation.
The problem with that?
JP Morgan says that higher housing prices (which are creating stickiness in services inflation) will make Australian disinflation take a lot longer to tackle.