Building approvals have been volatile, but with this bounce, and other data like housing credit, it does look like the housing sector is near bottom after a very mild downturn.
The continued improvement in services-sector activity is particularly impressive given the head winds restraining the consumer-related sectors.
We are getting the investment we need to see. It continues the theme of rebalancing in the economy: slowing consumer spending and housing being replaced with stronger exports and investment.
We are getting the investment we need to see, ... It continues the theme of rebalancing in the economy: slowing consumer spending and housing being replaced with stronger exports and investment.
This is confirming that the Australian economy stepped down several gears in the second half of last year.
Strong employment keeps alive the risks to wage inflation and the central bank's concerns.
A difficult retail environment resulted in significant discounting, so lower prices for clothing, household appliances, tools and computing equipment are possible. A low CPI number obviously increases the odds on the Reserve Bank continuing to sit on the sidelines.
Whether or not this consumer caution becomes a persistent theme in 2006 will depend to a large extent on labor market trends.
Policymaker's toleration for inflation risks must be lower when the inflation rate is bumping around 3% per annum,
Signs of slowing growth and wages moving sideways rather than picking up, and of course the currency showing some signs of life, suggest that the Reserve Bank has probably administered enough monetary medicine for the time being.
