Macro (Re)view (12/9) | In readiness for the Fed

Risk sentiment remained at the forefront this week as US equities reset to new record highs while the Australian dollar stood out gaining well over 1% against the US dollar. Bond yields were contained, with rising concerns over the situation in French politics failing to have any spillovers. Next week sees the Fed come back to the table where the FOMC is expected to recommence the easing cycle in the US with a 25bps cut. The BoC (Canada) is also expected to cut rates by 25bps next week, while the BoE (UK) and BoJ (Japan) are likely to leave policy on hold. Domestically, the focus will be on the August employment report.   

A spike in weekly jobless claims to their highest level (263k) in almost 4 years and a larger-than-expected downward to historical payrolls growth (-911k) added fresh concerns over the state of the US labour market. That follows a rise in the unemployment rate to 4.3% reported last week, a high back to late 2021. At the recent Jackson Hole Symposium, Fed Chair Powell effectively communicated that the FOMC's focus had pivoted from the inflation side of its dual mandate to its full employment objective. The recent labour market data and Powell's pivot have anchored expectations that the Fed will resume its easing cycle next week, with markets anticipating a total of 2-3 rate cuts by year end. This week's inflation data was seen as well behaved enough for rates to be reduced. Headline CPI lifted from 2.7% to 2.9%yr in August and the core rate held at 3.1%yr, both measures coming in on expectations but still well above the Fed's target, so a cautious tone can likely be expected from Powell next week.    

The ECB returned from its summer break leaving interest rates on hold this week, continuing to maintain that policy is 'in a good place'. The main depo rate was left at 2% for the second meeting in succession following an easing cycle where rates were cut on 8 occasions over the preceding 13 months. President Lagarde vowed that policy decisions will remain 'data-dependent' and taken on a 'meeting-by-meeting' basis, all indications the ECB has, barring further shocks, reached the end of its easing cycle. Markets currently assess a further rate cut by year-end as a tail risk at around a 10% chance, and not before the December meeting according to ECB sources quoted by Reuters. New economic forecasts compiled by ECB staff were little changed from the previous round in June. In the post-meeting press conference, Lagarde pointed to the outlook for inflation to remain around the 2% target as behind the Governing Council's comfort with current rates settings. Lagarde also said that uncertainty around trade had decreased after the US finalised its decision to impose 15% import duties on the EU. 

A lighter calendar in Australia saw survey data as the focus. Consumer sentiment on the Westpac-Melbourne Institute Index softened by 3.1% in September to a level around 4pts below the 100 marker that separates pessimism from optimism. The index has been in pessimistic territory since early 2022, though it posted its highest reading since then in August (98.5) following the RBA's rate cut. The easing back in sentiment in September looks to be more of a correction than an outright deterioration. Meanwhile, the NAB Business Survey reported contrasting movements. The confidence measure rose in August to +7 (from +5), around its long-run average. At +4, business conditions were also viewed as around average, albeit less upbeat than in July (+8). The surveys together broadly suggest that the economic backdrop in Australia remains resilient, consistent with the pick-up seen last week in GDP growth for the June quarter (see here).  

Macro (Re)view (5/9) | Payrolls falter again

Further signs of weakness in the US labour market in the August nonfarm payrolls report sees markets now discounting as much as 100bps of Fed rate cuts over the next 6 months - with speculation of a potential 50bps cut at the September meeting. US yields fell across the curve, an impulse that has reverberated globally - reversing an upward climb in longer-end yields that was the focus of markets earlier in the week. The US dollar (dxy basis) was near unchanged on the week, while equities were patchy across the board. US CPI data is a key focus next week.

    

Payrolls disappoint again

US nonfarm payrolls rose by just 22k in August, well short of the 75k consensus, while the prior two months were revised down by a combined 21k. Those revisions saw June adjusted from a 14k gain to a 13k fall - the first decline for monthly employment since the pandemic - though the July figure lifted from 73k to 79k. Known issues around data quality and sizeable revisions have made monthly payrolls highly volatile; however, a slowing trend has become clear. The 3-month average for payrolls is now just 29k, its weakest momentum in the post-Covid cycle. This pushed the unemployment rate up to 4.3% in August and the broader underemployment rate to 8.1%, leaving both measures at their highest since late 2021. Resulting downward pressure on wages growth sees average hourly earnings tracking at a 13-month low (3.7%yr), despite labour force participation (62.3%) that is now 0.5ppt below cycle highs. 

ECB set to remain on hold... 

The ECB goes into next week's meeting maintaining that policy is 'in a good place', but a new set of economic forecasts may leave the door ajar for a further rate cut by year-end. The Governing Council is set to leave the key depo rate (2.0%) unchanged, with recent commentary from ECB officials broadly reiterating a cautious approach moving forward. The ECB's Schnabel said she saw no need to adjust rates - in either direction - and that it was not possible in any case to use rates to 'fine-tune' inflation outcomes to the 2% target. 

Euro area inflation currently stands a touch above target, printing this week at 2.1%yr on a headline basis in August (up from 2.0%) while the core rate was steady at 2.3%yr. New forecasts from ECB staff next week could awaken markets to the prospect of the easing cycle being restarted if the outlook for growth and inflation is lowered. Those downgrades are possible due to the strength of the euro - especially amid impending Fed rate cuts - as well as uncertainty around US-EU trade.    

... as the BoE considers QT 

In the UK, BoE Governor Bailey told the Treasury Committee that market pricing for future rate cuts had adjusted accordingly to the central bank's 'gradual and careful' approach. Markets have reduced pricing for a rate cut by year-end to just a 33% chance, with a 25bps cut to 3.75% not fully discounted until April next year. Also of note, Governor Bailey said the pace of quantitative tightening - running since 2023 at a 12-month pace of ₤100bn - was an 'open decision' for the September meeting. The BoE has been under pressure to slow or halt QT amid rising gilt yields, with the 30-year maturity this week touching its highest since 1998. Governor Bailey said QT was not the cause of higher long-end yields but that the BoE would examine those interactions in its decision.   

Australian consumers drive June quarter growth 

Signs of a long-awaited revival in household consumption drove the Australian economy to stronger-than-expected growth of 0.6% in the June quarter. Annual growth lifted from 1.4% to 1.8%, tracking ahead of the RBA's expectation for 1.6% and 2.1% by year-end. A household consumption-led (0.9%) pick-up in growth has tightened expectations for the path of the RBA's easing cycle into a further two rate cuts, down from a possible three pre-release. The pressures households have faced from the cost of living and higher interest rates haven't gone away, but they appear to be easing. The effects of inflation returning to the (2-3%) target band, RBA rate cuts and the earlier Stage 3 tax cuts have combined to drive real disposable incomes up by 4.2% over the past year, the fastest increase in 4 years. 

The improved dynamics around real incomes as well as the continuation of a robust labour market are working to lift confidence. This is reflected in a greater willingness of households to spend rather than save, with the household saving ratio falling from 5.2% to 4.2%. All these factors helped drive household consumption to its strongest rise since the final quarter of 2022, up 0.9% in Q2 to be up by 2% through the year. Consumption growth was driven by discretionary purchases (1.4%) - reflective of improved confidence - on gains across recreational events (2%), transport (incl travel) (1.7%), and hotels, cafes and restaurants (0.7%). 

The strength of consumption growth is, however, not without caveats. Consumption may have been boosted by a quirk in the calendar that saw Easter and ANZAC Day falling in unusually close proximity, creating a holiday period in late April. That said, the household spending indicator rose by 0.5% in July (5.1%yr), indicating demand was holding up early in Q3 (see here). For more on the June quarter National Accounts please see my feature In Review article here. Also in Australia this week, dwelling approvals pulled back (-8.2%) in July (see here); meanwhile, the 90-day pause by Trump on his liberation day tariffs saw exports to the US surge, driving the trade surplus to $7.3bn in July - its widest since early 2024 (see here). 

Australian household spending rises 0.5% in July

Australian household spending rose by 0.5% in July, a solid outcome on the back of yesterday's National Accounts for the June quarter that showed signs of a long-awaited revival in household demand (see here). Services-related categories (1.6%) were the key driver of growth in spending as goods spending softened (-0.3%). 

Household spending lifted for the third month running with a 0.5% rise coming through in July. This lifted annual growth from 4.6% to 5.1%, its fastest pace since November 2023. Most categories contributed positively to spending growth in the month, including health (1.8%), transport (1.5%), other goods (1.5%), hotels and cafes and restaurants (1.4%) and recreation and culture (0.2%). Those gains were partly offset by falls in alcoholic beverages (-1.9%), furnishings and household equipment (-1.4%), clothing and footwear (-1.2%) and food (-0.1%).   

The composition of spending growth skewed towards non-discretionary purchases (0.8%m/m) over the discretionary segment (0.4%m/m). In annual terms, non-discretionary spending (5.9%) is outpacing discretionary spending (4.6%). 

Australia's trade surplus widens to $7.3bn in July

Australia's trade surplus hit wides going back to early 2024 coming in at $7.3bn in July from $5.4bn in June. The outcome defied expectations to narrow to $4.9bn. The wider surplus for July ($1.2bn) came as exports (3.3%) rose at pace for the second month running, with exports to the US surging (126%) after the Trump administration's 90-day pause on its liberation day tariffs. Meanwhile, imports (-1.3%) notched back-to-back falls.

Australia's unbeaten run of monthly trade surpluses now stands at 91, with the trade surplus coming in at $7.3bn in July - its widest since February 2024. The position on trade in any given month is the difference between revenue earned from exports ($46bn in July) and spending on imports ($38.7bn). The July result followed surpluses of $2.1bn in May and $5.4bn in June, taking the 3-month average to $4.9bn - levels that were last seen on that basis around the turn of the year. 

 

Export revenue increased by 3.3% to move north of $46bn in July to highs since late 2023. A key factor in this was the Trump administration earlier announcing a 90-day pause on the tariffs it imposed on its trading partners back on April 2. Australia was hit with the baseline tariff of 10%, but with that paused exports to the US market surged 126% to $4.8bn. This is down from the earlier high of $6bn seen in January, ahead of 'liberation day'.  

Across the key export categories, non-monetary gold - of which the US is a major destination - accelerated by 8.3%, sending the value of exports of the yellow metal to new record highs above $6bn. Non-rural goods rose 1.9% for the month on gains in iron ore (1.5%), coal (1.6%) and LNG (5.1%). Metals (ex-non-monetary gold) lifted 7.4%.     

Rural goods saw a strong gain of 5.9% - their most since liberation day - with meat exports rising by 7.2%. Exports of domestic beef to the US were targeted by President Trump in his initial tariff announcements. Gains more broadly were seen across exports of cereals (2.1%), wool (3.9%) and other products (7.3%).  

Import spending declined by 1.3% in July to $38.7bn following a 1.5% fall in June. Annual growth has slowed to 2.6%. Consumption goods (-2.6%) have been the main source of weakness, down 7.9% over the past two months. Spending on vehicle imports, electrical items, clothing and footwear, and toys books and leisure goods has declined, though this looks to be price-driven; trade volume data reported through the week has identified strength in demand across these items. According to the National Accounts, import prices fell 0.6% in the June quarter, with the Australian dollar appreciating. Against the decline in consumption goods, capital goods (2.6%) and intermediate goods (1.1%) advanced in July. 

In review | Australian Q2 GDP: Household revival drives growth

The Australian economy expanded by 0.6% in the June quarter, a stronger than expected outturn that was driven by a long-awaited boost from household consumption. Growth lifted from 1.4% to 1.8% through the year, above the RBA's recently downgraded forecast for 1.6%. Pressures from the cost of living and higher interest rates have kept households quiet over the past few years, but there are encouraging signs that a shift is emerging.  

Growth in Australia through the first half of the year was 0.9%, a result that compares favourably to other major advanced economies where growth swung on volatility in trade flows and inventories as the US administration pressed ahead with its new tariff regime. Australia has come through this period relatively unscathed, hit with the baseline 10% tariff on Liberation Day while trade with the US accounts for only 6% of the nation's total exports according to DFAT analysis. 

The composition of growth was the most encouraging aspect of the June quarter National Accounts. Public demand has been the cornerstone for the past couple of years, but with that now easing the question has been whether the private sector can take up the running. Household consumption moved up a gear in the June quarter, indicating that rising real incomes, RBA rate cuts and earlier tax relief are starting to gain traction; however, this is only one quarter, and growth also lacks the support of business investment and dwelling investment.    

Consumption-led growth outpacing RBA forecasts suggests the pace of further rate cuts will be gradual. But there are strong reasons for the RBA to continue its easing cycle. Interest rate settings - prior to the August cut - and tax payments still accounted for an elevated share of gross disposable income (20.9%) in the June quarter. Meanwhile, with nominal GDP running at a 4.1% year-on-year pace compared to growth in real GDP of 1.8%, this is an economy where inflation is in the 2s - consistent with the RBA's target band. Recent commentary from the RBA has placed less emphasis on weakness in productivity growth (0.2%Y/Y) in terms of its implications for interest rate decisions.    

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National Accounts — Q2 | Expenditure: GDP (E) 0.5%q/q, 2.0%Y/Y

Household consumption (0.9%q/q, 2.0%Y/Y) — Cautious consumers finally showed signs of loosening the purse strings as household consumption rose at its fastest pace since Q4 2022 after lifting by 0.9% in the June quarter. Year-ended growth picked up from 0.8% to 2%. Cost-of-living pressures and higher interest rates have squeezed households for the past 2-3 years; however, this is tentative evidence that the tide may be starting to turn. 

Discretionary spending (1.4%) accelerated by its most in 11 quarters to drive overall consumption growth. The end of financial year sales and new product launches (including the Nintendo Switch 2) supported spending on furnishings and household equipment (1.7%). Meanwhile, tourism-related spending was bolstered in late April as the timing of Easter and the ANZAC day holiday fell in unusually close proximity, allowing many people to take extended leave over this period. This boosted spending on transport services (1.7%), hotels, cafes and restaurants (0.7%) and recreation and culture events (2%). Additionally, vehicle spending rose 2.4% following a gain of similar magnitude last quarter. Essentials consumption rose 0.5% in the quarter on the back of health-related spending (1.9%) amid the flu season. 

Household finances are increasingly a tailwind for consumption. With inflation having cooled significantly from its late 2022 peak near 8% to now be within the RBA's 2-3% target band, real disposable income growth rose 4.2% through the year to the June quarter - its fastest pace in more than 4 years. Robust labour market conditions continue to underpin household income, with the effects of RBA rate cuts and the earlier Stage 3 tax cuts also playing a role. As a result, households were a little more willing to spend rather than save, with the household saving ratio seeing its first decline in 12 months falling from 5.2% to 4.2%. 

Dwelling investment (0.4%q/q, 4.8%Y/Y) — Strong growth in dwelling investment in the March quarter (2.1%) was unable to be sustained as growth eased back to 0.4% in the June quarter. Growth through the year softened to 4.8% from 5%. New home building activity slowed from 1.7% to 0.4% quarter-on-quarter - its weakest outcome since Q4 2023 - while alterations came close to stalling at 0.3% from 2.8% in the March quarter. Activity in the sector is trending upwards nonetheless, helped by RBA rate cuts as well as easing capacity and cost pressures - legacies from the pandemic that had cast a long shadow.        

Business investment (-0.4%q/q, 0.3%Y/Y) — Contracted by 0.4% in the June quarter to leave business investment down by 0.1% through the first half of the year. The earlier upswing from 2022-23 has been cycled, leaving business investment with its weakest momentum since the pandemic struck in 2020. 

The completion of renewable energy projects weighed on non-dwelling construction in the quarter (-1.7%) and over the first half of the year (-0.5%). Equipment investment (-0.1%) has been another source of weakness (-1.5% in the first half). Partially offsetting support continues to come from intellectual property products, up a further 1.6% in the quarter to be 6.8% higher through the year.

Public demand (0.2%q/q, 3.0%Y/Y) — Momentum in public demand cooled rapidly over the first half of the year (-0.2%), with subdued growth in the June quarter (0.2%) unable to offset a contraction in the March quarter (-0.3%). Annual growth eased from 4% to 3%. Growth in underlying investment fell by 3.7% in the quarter to be down by 6.7% across the first half. Reduced spending on transport and health-related infrastructure and on defence investment were the key drivers. By contrast, government expenditure remains robust (1%q/q, 4%Y/Y), supported in the June quarter by health-related spending and on staging the 2025 federal election. 

Inventories (-0.1ppt in Q2, 0ppt yr) — Inventory levels increased by $1.2bn in the June quarter, below $2.1bn rise in the previous quarter. That change in the change of inventories (-$0.9bn) deducted modestly (-0.1ppt) from quarterly GDP.  

Net exports (+0.1ppt in Q2, 0ppt yr) — External trade was effectively neutral for GDP growth in the June quarter and over the past year. Australian trade flows have not been affected to any meaningful degree through the early stages of the US administration's new tariff regime. 

Exports lifted by 1.7% in the June quarter (1.5%Y/Y), seeing their fastest rise in 2 years. This came after exports fell in the March quarter (-0.7%) as adverse weather disrupted bulk commodity shipments. In the latest quarter, services (3.3%) drove export growth on a lift in tourist numbers from New Zealand that saw inbound travel accelerate (4.8%). Resources exports rebounded from the earlier disruptions to rise by 2%, their fastest increase since Q2 2022.

A demand-led recovery in the domestic economy was reflected in imports, which rose by 1.4% for the quarter (1.9%Y/Y). The services sector advanced (3%) as demand for offshore travel picked up (3.5%). Meanwhile, consumption goods were also strong (3.5%), with vehicles (6.3%), clothing and footwear (7.2%) and toys, books and leisure goods (7.9%) all featuring.   

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National Accounts — Q2 | Incomes: GDP (I) 0.6%q/q, 1.8%Y/Y 

The income measure for GDP rose by 0.6% for the June quarter to be 1.8% higher through the year, up from 1.3% previously. Growth in the national wage bill slowed in the June quarter, with the compensation of employees rising by 1.1% - its slowest increase in a year - though the annual pace firmed from 6.5% to 6.7%. The public sector wage bill (2.1%) outpaced the private sector's (0.8%), with costs associated with running the federal election partly explaining the difference. In the private sector, wage reforms in aged care and childcare were a key driver. Improved trading conditions supported rising wages in hospitality. 

Corporate profits (non-financial gross operating surplus) eased by 0.1% quarter-on-quarter to be down 4.3% through the year. Falls in commodity prices were the key factor behind the weakness, reflected in the terms of trade that declined 1% in Q2 (-2.4%Y/Y). Margin pressures remain a headwind to firms across many industries. Gross mixed income - small company profits - contracted by 0.9% in the quarter (4.2%Y/Y).     

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National Accounts — Q2 | Production: GDP (P) 0.7%q/q, 1.7%Y/Y

The estimate for GDP using the production approach increased by 0.7% in the June quarter, lifting annual growth from 1.2% to 1.7%. Across the industries, those in goods distribution saw the fastest pace of growth (1.2%q/q). Within this, increased demand for air travel saw the transport sector up 1.7%. Stronger consumption demand drove the retail (0.4%) and wholesale (1.5%) industries.    

Goods production was up 0.6% for the quarter overall, driven entirely by mining (2.3%), which offset weakness in construction (-0.9%), manufacturing (-0.6%) and utilities (-2%). In mining, production rebounded from the weather-related disruptions in Q1, with gains coming through across iron ore (6.1%), oil and gas (1.2%) and coal (0.8%). 

In the services industries, household services led the way advancing by 1.1% in Q2. Increased tourism and stronger demand for dining out led to a 1.9% rise from the hospitality industry. Increased gambling activity drove output in arts and recreation services. Business services lifted 0.4% in the quarter. Here, the strength was in information media and telecommunications (1.8%) - associated with data centres - and finance and insurance (1.1%) as loan books expanded. 

Australian GDP growth 0.6% in Q2

The Australian economy expanded by 0.6% in the June quarter, seeing momentum lift from a subdued March quarter (0.3%) to outpace expectations (0.5%). Year-ended growth firmed from 1.4% to 1.8%, coming in above the RBA's recently downgraded view (1.6%). This together with household consumption finally showing signs of rediscovering form point to the RBA's easing cycle continuing to proceed at a gradual pace. Inflation is not standing in the way of further cuts either; nominal GDP growth running at 4.1%Y/Y means this is an economy where inflation is in the 2s - consistent with the RBA's target band.   

The key theme in the domestic economy in the June quarter was household consumption picking up to rise at its fastest pace (0.9%) since the December quarter of 2022; finally showing signs of responding to the slowing in inflation, rising real incomes and RBA rate cuts. This largely drove growth as business investment contracted (-0.4%) and dwelling investment was subdued (0.4%). Modest and offsetting contributions meant that net exports (+0.1ppt) and inventories (-0.1ppt) were growth neutral in the quarter. 

The 0.9% lift in household consumption saw year-ended growth rise from 0.8% to 2%, a 2-year high. Discretionary consumption (1.4%) in particular was the key area of strength. This was supported by end-of-financial-year sales, new product launches, and by holiday-related spending due to the close timing of public holidays for Easter and ANZAC day, with events, hotels, cafes and restaurants and transport services benefitting. A reduction in the household saving ratio from 5.2% to 4.2% as well as real incomes rising at their fastest pace in 4 years (4.2%Y/Y) - the result of easing inflation - were key factors behind the lift in consumption growth.  

More to come. 

Australia Current Account -$13.7bn in Q2; net exports 0.1ppt

Australia's current account deficit remained at around 2% of GDP in the June quarter. Export revenue was held flat - despite underlying volumes rising (1.7%) - as uncertainty around global trade caused by the US administration's tariff regime weighed on commodity prices. Expenditure on imports meanwhile rose 0.8% in the quarter. Overseas travel underpinned a pick-up in import volumes (1.4%) while import prices eased (-0.7%). The overall dynamics are broadly neutral for GDP growth in the June quarter, with net exports to add just 0.1ppt.   

Australia's current account - the nation's position on trade and financial transactions with the rest of the world - remained in deficit for the 9th consecutive quarter. Effectively, more capital has flowed out of Australian than has come in over this period - a factor that has contributed downward pressure on the Australian dollar, which in trade weighted terms is down more than 1.5% since the end of the June quarter 2023. In nominal terms, the current account deficit was $13.7bn (around 2% of GDP), narrowing slightly from a deficit of $14.1bn in the March quarter.

Australia actually runs a surplus on its trade in goods and services with the rest of the world, though it narrowed in this latest quarter from $4.3bn to $3.1bn. However, the nation has an income deficit: payments to overseas investors (dividends, interest payments etc) exceed returns earned by domestic investors offshore. That deficit narrowed in the June quarter to $16.8bn from $18bn - a $1.2bn improvement that offset the reduction in the trade surplus, leaving the current account deficit little changed.    

Export revenue was flat at $164bn in the quarter (1.9%Y/Y) - that was despite the volume of goods and services exported rising at a decent clip of 1.7%, its fastest rise in 2 years. Higher volumes were supported by resources (2%), rural goods (1.7%) and services (3.3%) on the back of strong inbound travel (4.8%). However, despite strength in demand for Australian exports, the prices of those exports fell overall by 1.7% in the quarter; declines in commodity prices were a key factor. 

Import spending rose in Q2 by 0.8% to $160.9bn (4.9%Y/Y). That movement was driven by a lift in demand, with import volumes advancing by 1.4% - the strongest increase since Q1 2024 - against a 0.8% decline in import prices. In volume trade, services (3%) was the key driver of strength, with offshore travel up 3.5%. Goods imports lifted 0.8% on the back of consumption goods (3.5%), reflecting import orders for vehicles (6.3%), clothing and footwear (7.2%), and leisure goods, toys and books (7.9%). Non-monetary gold (37.7%) was also a factor amid volatility on global markets.

Following today's report, the ABS has put the contribution from net exports to GDP growth in the June quarter at a broadly neutral 0.1ppt. The US administration's tariffs have led to significant volatility in global trade flows, with resulting impacts on GDP growth. That, however, has not been the case in Australia. 

Australian dwelling approvals down 8.2% in July

Australian dwelling approvals posted a larger-than-expected fall of 8.2% in July, mostly reversing their strong rise in June (12.2%). Approvals were forecast to only come back by 5% for the month. The retracement was all in the higher-density segment (-18.8%) as detached approvals (0.6%) rose for the first time since April. Higher interest rates and capacity pressures within the construction sector are clearly not new headwinds but still seem to be holding back approvals. 

National dwelling approvals came in at 15.8k in July after falling 8.2% from their 34-month high in June (17.2k). Despite this latest result, approvals have seen a turn in momentum after being on the slide earlier in the year. Strength in the higher-density segment has been the key factor, with approvals working their way up to average 16.1k over the past 3 months.   

Detached or house approvals have consistently come in around 9-9.5k per month so far in 2025. By contrast, higher-density approvals have been highly volatile, falling as low as 5.4k in April before surging to a high of 7.8k in June. The available estimates show that the high-rise segment has been the most volatile as approvals for townhouses and in the low-rise segment have climbed.

Alteration approvals show no sign of easing up rising 1.9% to a new record high ($1.25bn) in July. The higher cost of alterations has been a factor in the rise, but the fact that approvals for new dwellings have struggled suggests there has also been a preference shift within the market. More insights on the volume of alteration work will come to hand in Wednesday's National Accounts for the June quarter.