Why NSW is #1

If Australian policymakers had their way, there would be a smooth transition to non-mining sources of growth as the mining construction boom fades.

"If Australian policymakers had their way, there would be a smooth transition to non-mining sources of growth as the mining construction boom fades. "
ANZ Research

Householdsare largely playing along, but over-enthusiastic property investors and under-enthusiastic businessesare not behaving quite as agreeably and there was more evidence of this in the past week’s data.

The excessive speculative activity in the investor housing market was on display with credit growth for this sector rising solidly in August.

The potential for this activity to amplify the property price cycle has received some attention from the Reserve Bank, which this week suggested there is likely to be an announcement before the end of the year about policy to cool this sector.

The RBA admitted recently there is little it can do to rev-up the business sector, given interest rates are low and have been for some time.

Non-residential construction approvals data were softer this week, due particularly to a declining commercial property sector and especially office approvals.

Business credit was unchanged in August. Engineering construction data also showed a sharp slowdown although not unexpected due to the completion of many major resources projects.

The strength of NSW’s economy was highlighted in retail sales and house price data. The modest slowing in the rate of growth of Sydney house prices would be welcomed by the RBA, however.