Caution: there ARE risks in the Australian economy – ANZ

By FXStreet FXStreet (Guatemala) – Analysts at ANZ explained that yesterday’s building approvals, international trade and services sector data for December 2015 highlighted a few risks to the domestic economy.

Key Quotes:

“The first is a slowing in the labour intensive residential construction industry. Looking through the monthly volatility, building approvals are trending lower and were 8% below their April 2015 peak.”

“Moreover, growth in dwelling prices has slowed sharply, removing one tailwind for consumer spending. The strength in property and related activity has been a key support to overall activity and jobs growth. Yesterday’s data also showed that non-residential building approvals continue to track broadly sideways.

Secondly, the services sector appears to have lost some momentum coming into 2016 as indicated by softer readings in recent months for Ai Group’s services sector index (it may be no coincidence that the US non- manufacturing ISM has also slowed in tandem).

Thirdly, the international trade deficit widened sharply in December, due largely to lower bulk commodity prices. On the bright side, net tourism-related exports continue to rise strongly but even here we expect that the impetus to growth from a lower AUD will wane over 2016.”
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Source:: FX Street