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Building approvals rise in March

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2024-05-02

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Building approvals rose in March, but the trade account saw a larger-than-forecast fall in the size of the goods surplus for the month.

Data from the Australian Bureau of Statistics again showed that the weak run of commodity prices in the first months of the year impacted the size of the goods surplus, which fell by more than $1.5 billion in March to $5.024 billion, from $6.6 billion in February and more than $9.6 billion in January. Market forecasts were for a figure around $7.3 billion.

While the value of goods exports edged up by just $51 million (0.1%, a rounding error) in the month to $44.91 billion, the surplus was in fact the smallest in more than three years - since the end of 2020 and the depths of the pandemic.

The value of imports jumped 4.2% or more than $1.6 billion to $39.87 billion in the month.

While imports of consumption goods rose 4.1% in March, big-ticket items like private vehicles were down 1.1%, and imports of electrical goods (phones, TVs, computers, etc.) were off by a large 18% as shoppers shied away from major discretionary purchases (supported by the weak retail sales data - a fall of 0.4% in March).

But imports of textiles, footwear, and clothing were up 10.7%.

Moody’s Analytics economists said that “stripping out some of the monthly noise, the trend estimate for the surplus fell to A$8.3 billion from a downwardly revised estimate of $8.5 billion in February."

The fall is not unexpected as the April commodity price index from the Reserve Bank showed this week. The index fell 1.5% in April, after March's 4.7% drop and the 1.9% dip in February - mostly due to lower iron ore, coal, and LNG prices at the start of the year and weak prices for key metals like copper, nickel, and lithium. Relative to April 2023, the commodity prices are down 12% though the softer Australian dollar (off around 5% year to date) has helped ease the impact of the falls.

Still, those losses in iron ore, copper, and LNG earlier in the year partly reversed in April - rural softs like wheat were weaker though. Iron ore prices were back close to $US110 a tonne for much of April (around $US115 a tonne this week on the SGX iron ore trading platform, from a low of just over $US98 a tonne in late March).

Meanwhile, the ABS reported that there was a small, 1.9% rise in the total number of dwellings approvals in March, more than offsetting February’s 0.9% fall.

The Bureau of said there were 12,947 approvals made in the month (seasonally adjusted) which took the total above the 12,817, seasonally adjusted approvals in January.

Daniel Rossi, ABS head of construction statistics, said: "Approvals for private houses rose 3.8 per cent...Approvals for private sector dwellings excluding houses rose 3.6 per cent in March in seasonally adjusted terms, following a 12-year low in February.”

Total dwelling approvals rose in Victoria (3.2%) and Western Australia (1.5%). But there were falls in Tasmania (-18.1%), South Australia (-7.0%), Queensland (-5.2%), and NSW (-1.2%) fell in March.

Approvals for private sector houses rose 6% in Victoria, 4% in NSW, 3.2% in Queensland, and 1.1% in South Australia). Only Western Australia (1.8%) saw a fall in March.

The average approval value for a new house continued its annual rise in March 2024, to $468,800 per house. This was 4.2% higher than the average value in March 2023, although the pace of growth in average approval values has slowed, the ABS data showed.

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