Australia Building Approvals Drop 2012.04.02

April 02, 2012 22:15

Australia’s total unit dwelling approvals dropped a seasonally adjusted 7.8% in February 2012 to 10,771, after the previous month experienced a 1.1% gain according to Australian Bureau of Statistics on Monday. The fall came in worse than economists’ expectations of a 0.5% increase and was the largest decline seen since November 2011. Private sector homes went lower a seasonally adjusted 3.4% in the month, dropping for the third consecutive month. In other details, the total value of building approvals dipped a seasonally adjusted32.1% in the month, with residential homes falling flat and non-residential units descending 53.7%.Alongside this, February 2012 seasonally adjusted total approved units ebbed lower 15.2% from February the previous year although analystsexpected a 0.3% increase. In the year to year comparison, private sector houses dropped 11.7% and private sector units excluding homes fell 18.8%.

 

In other news, the United Kingdom manufacturing purchasing managers’ index (PMI) increased to 52.1 in March, the highest in ten months according to Markit reports on Monday. The number followed a revised increase of 51.5 in February. The sector experienced increased output as well as new orders. Increases in output can be attributed partly to a reduction in backlogs of work and record inventory building. As well, demand increased both domestically and internationally.Yet concern remains as the production pace is beating the influx of new business. Furthermore, cost pressures increased markedly to a seven-month peak due to inclines in oil and metal prices as well as electronic components, plastics and transportation. Average purchase prices jumped at the quickest rate since August 2011.

The GBPAUD has rallied higher despite negative swap rates on the long side. This tells us that longs are hoping for a significant rally to the upside and are expecting the pair to reach 1.5630 in the short term and 1.6000 in the long term. 

 

Eugene Ross, Analyst

Admiral Markets

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