Slackening building approvals point to sluggish future


Building approvals fell by 1.2% in December, after a 7.5% gain in November.  

Looking through the volatility, the fall in December confirms the downward trend that has been in place for seven consecutive months.  

Approvals remain at a high level and comfortably above the long-run average.  

This suggests that building activity is set to remain elevated over the next 12 to 18 months.  Nonetheless, the trend decline suggests that residential construction is set to weaken, possibly by the end of this year.

Australia posted the second consecutive month of surplus in December of $3.5bn, the largest monthly surplus on record.  

This surplus can mostly be attributed to a jump in the value of exports.  Exports have surged in the two months to December, due to a strong lift in bulk commodity prices.


US share markets stalled overnight, as investors turned wary after US President's latest remarks on trade and other policies. 

The Dow Jones lost 6 points and the S&P 500 index rose just 2 points.

Interest Rates: US 10-year Treasury yields are unchanged at 2.47% after ranging between 2.43% and 2.48% while 2-year yields are a touch lower.

Foreign Exchange:

The US dollar index is little changed on the day.  EUR/USD rose from 1.0780 to 1.0829, before retracing to 1.0785.

GB/USD underperformed, falling from 1.2700 to 1.2527 after the Bank of England statement.  USD/JPY did a round trip from 112.70 to 112.06 and back. 

AUD/USD was an outperformer overnight; it extended its trade data-related rally from 0.7640 to a 2½-month high of 0.7696 - before consolidating to 0.7666. 

NZD/USD tagged along, rising to 0.7337 before retracing to 0.7288.  AUD/NZD rose further, from 1.0470 to 1.0520.


The price of gold moved higher overnight with a US rate hike not imminent and Trump remarks creating uncertainty on the outlook. 

Meanwhile, the world price of oil fell from a one-month high after signs that OPEC will have to make further cuts to fully comply with last year's production deal.


Producer prices rose by 0.7% in December, taking the annual rate from 0.1% in November to 1.6% in December.


Consumer confidence edged up from 43.1 in December to 43.2 in January.

New Zealand: 

ANZ job ads declined 0.2% in January, the first decline in 17 months.  However, the annual rate at 19.6% is still suggesting strong labour market demand.

United Kingdom: 

The Bank of England monetary policy committee (MPC) voted to leave all elements of policy alone at its recent meeting. 

It kept its benchmark bank rate unchanged at 0.25%.  The central bank reiterated that it still holds a neutral bias.  It left its bond-buying program unchanged; the asset purchase goal remaining at £435bn and the corporate bond target at £10bn. 

As expected, the MPC upgraded its forecasts for economic growth from 1.4% to 2% for 2017.  On the inflation front, there was little change.

United States: 

Non-farm productivity grew by 1.3% in the December quarter of last year, after 3.5% growth in the previous quarter.

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