Australia: Key risk events ahead - Westpac

Analysts at Westpac provide brief insights on what to expect from the Australian economic events due on the cards tomorrow.

Key Quotes:

July building approvals

Last: 10.9%, Westpac forecast: -4.0%, market forecast: -5.0%, Range: -12% to +1%

“Dwelling approvals posted a surprisingly strong 10.9% rebound in June, coming off a 5.4% drop in May. High rise approvals jumped 14% but non-high rise segments also posted a strong gain

The high rise move is most likely monthly volatility that will unwind in July. The firming in other segments may be more enduring though with construction-related finance approvals showing a notable lift in Q2 (the number of approvals for construction up 7.2%qtr). The combined effect is likely to see only a partial retracement in July with total approvals expected to be down 4% but still up on May levels, reflecting the lift in non-high rise segments.”

Q2 construction work

Last: -0.7%, Westpac forecast: 1.0%, Market forecast: 1.0%, Range: -3% to +1%

“Construction activity weakened over the past three years as the downturn in private infrastructure (centred on mining) outweighed gains elsewhere.

In 2017, the first half was a choppy one. Work fell in Q1, -0.7%, dented by weather disruptions. In Q2, work rose by a forecast 1.0%, with the return to more normal conditions.”