Aussies opt to stay and renovateWeekly Petrol Prices; Building Approvals; Job ads
Building approvals: Council approvals to build new homes fell by 8.4 per cent in December to be down by 22.5 per cent over the year. Approvals stand at 5½-year lows. But Tasmanian dwelling approvals are at 8- year highs.
Renovations: The trend value of alterations and additions approvals rose for the fourth straight month in December, up by 1.2 per cent to 9-month highs.
Petrol: According to data from the Australian Institute of Petroleum, the national average price of unleaded petrol fell by 1.1 cents from six-week highs to 130.8 cents a litre in the past week.
Job advertisements: ANZ job advertisements fell by 1.7 per cent in January. Ads were down by 3.7 per cent over the year and down by 4.1 per cent on 7-year highs set in May. 
What does it all mean?
Local councils are approving the construction of fewer dwellings. That means less stock will be added onto the market. And that will act as a support for home prices. At the same time that fewer houses and apartments are being approved, more people are opting to stay and renovate. Renovation approvals are again approaching record levels.
It may have something to do with the uncertainty on US-China trade talks. Or perhaps the softening of share prices, home prices and the Aussie dollar late in 2018. But economic data released so far in 2019 has generally taken on a softer hue. Companies continue to do well and the job market is strong – especially in NSW and Victoria. While job ads have slowed, they are still consistent with hiring, but at a slower pace. Overall most indicators suggests that momentum has been checked. And that means the Reserve Bank has no need to change policy settings in any direction.
The wholesale petrol price (terminal gate price) is 115.7 cents a litre. So adding on the average margin of 12-13 cents, motorists in the bigger capital cities should expect pump prices on average at 125-130 cents a litre. The problem is that discounting cycles complicate the situation. As does the lack of synchronicity between the southern and eastern capitals. Overall, motorists have little tocomplain about with current petrol pricing.
What do the figures show?Petrol prices
According to data from the Australian Institute of Petroleum, the national average price of unleaded petrol fell by 1.1 cents from six-week highs to 130.8 cents a litre in the past week.
The metropolitan petrol price fell by 2.4 cents to 129.9 cents per litre, but the regional price rose by 1.7 cents to 132.6 cents per litre.
Average unleaded petrol prices across states and territories over the past week were: Sydney (up by 6.4 cents to 132.3 c/l), Melbourne (down by 6.2 cents to 129.6 c/l), Brisbane (down by 6.6 cents to 128.0 c/l), Adelaide (down by 12.4 cents to 123.2 c/l), Perth (up by 0.8 cents to 129.0 c/l), Darwin (down by 0.3 cents to 128.1 c/l), Canberra (down by 0.6 cents to 142.8 c/l) and Hobart (down by 1.2 cents to 141.9 c/l).
Today, the national average wholesale (terminal gate) unleaded petrol price stands at 115.7 cents a litre, down by 1.8 cents over the week. The terminal gate diesel price stands at 128.9 cents a litre, down by 0.4 cents over the past week.
The national average diesel petrol price rose by 0.5 cents to 142.8 cents a litre over the week. Themetropolitan price rose by 0.9 cents to 141.7 cents a litre with the regional price up by 0.3 cents to 143.7 cents a litre.
Last week, the key Singapore gasoline price fell by US15 cents or 0.2 per cent to US$61.10 a barrel. In Australian dollar terms, the Singapore gasoline price fell by $1.95 cents or 2.3 per cent last week to $84.38 a barrel or 53.07 cents a litre.
MotorMouth records the following average retail prices for capital cities today: Sydney 127.2c; Melbourne 126.4c; Brisbane 125.1c; Adelaide 136.3c; Perth 115.5c; Canberra 142.0c; Darwin 127.9c; Hobart 140.8c.
Job advertisements
ANZ job advertisements fell by 1.7 per cent in January to be down 3.7 per cent on the year – the first annual decline in almost four years. Ads are now down 4.1 per cent on recent 7-year highs set in May. In trend terms, job ads fell 0.5 per cent to be down 0.7 per cent on a year ago.
Building Approvals – December
Council approvals to build new homes fell by 8.4 per cent in December to be down by 22.5 per cent over the year. Approvals stand at 5½-year lows.
House approvals fell by 2.1 per cent and apartment approvals fell by 18.6 per cent.
In trend terms, overall approvals fell by 4.1 per cent. House approvals fell by 1.1 per cent and apartment approvals were down by 8.9 per cent.
Over the past year 211,821 new homes were approved – a 4-year low and down from the record high of 242,779 in the year to August 2016.
Dwelling approvals across states/territories in December: NSW (down 8.6 per cent); Victoria (down 8.1 per cent); Queensland (down 5.8 per cent); South Australia (up 5.6 per cent); Western Australia (up 1.1 per cent); Tasmania (down 24.3 per cent). Trend terms: Northern Territory (up 1.7 per cent); ACT (down 21.3 per cent).
The value of all commercial and residential building approvals fell by 7.5 per cent in December to be down 14.2 per cent on the year. Residential approvals fell by 5.9 per cent; new building fell by 7.2 per cent; alterations & additions rose by 3.1 per cent. Commercial building fell by 9.8 per cent after rising by 10.5 per cent in November.
What is the importance of the economic data?
Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory’s metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.
The monthly Job Advertisements release is a leading employment indicator. Employers only seek additional staff if business activity is strong, and more importantly, if they expect that conditions will remain favourable in coming months. It takes around 5-6 months for the new staff to be added to the payrolls. But a fall in job advertisements would have a more immediate impact on monthly employment estimates.
What are the implications for interest rates and investors?
Unleaded petrol prices are settling into a range of 125-130 cents a litre. Current pricing shouldn’t serve as a constraint on consumer spending. The easing phases of petrol discounting cycles are continuing in Sydney, Melbourne and Brisbane but the discounting cycle has ended in Adelaide for now.
The job market remains in good shape but global concerns have made businesses a little more wary about employing, spending and investing. Resolution of the US-China trade dispute would serve as a major positive for economic momentum across the globe.
Builders can start turning attention to the renovation market and growing home building markets like Tasmania and regional Victoria. The high-flying infrastructure market will also be an attraction for some building trades. There are always cycles in building and the current cycle is no different. New home building activity will ease from highs over 2019.
CommSec expects interest rates to be unchanged for the foreseeable future.
Published by Craig James, Chief Economist, CommSec