Australian economic events and implications

Australian data was mostly good last week. New home sales fell 5% in February and remain in a downtrend consistent with slowing building approvals. Home prices rose modestly in March, with ongoing confirmation of a loss of momentum compared to last year. Job vacancies are at levels consistent with solid employment growth and AIG’s manufacturing conditions PMI rose to a booming 58.1 - the Australian manufacturing PMI is amongst the highest in the world, a testament to the boost provided by the fall in the Australian dollar since 2011. The qualifier is that it’s likely dependent on the Australian dollar remaining low in contrast to its recent rebound. The loss of momentum in the national average house price is clearly due to Sydney which has really come off the boil. A further slowing is likely ahead with a modest cyclical decline in prices likely around 2017-18. In the absence of significant rate hikes or a recession, it’s still hard to see a property crash. See the full weekly update: (VIEW LINK)