Demand for home loans remains weak

JUST 50,279 people took out a new home loan in July and retail spending remained slim, despite households benefiting from a round of tax cuts.
Demand for owner-occupied home loans fell for a sixth straight month in July, declining by a seasonally-adjusted 0.2 per cent to a four-year low, the Australian Bureau of Statistics says.

Economists had forecast flat growth in July.

At the same time, the bureau's new retail trade trends report shows consumer spending rose 0.1 per cent in trend terms to $18.2 billion.

The data - released today - back the Reserve Bank of Australia's decision to cut its official cash rate earlier this month, the first reduction in nearly seven years.

The $7 billion in tax cuts introduced in July - worth around $20 per week for the average wage earner - was partly offset by another round of independent loan rate increases by the retail banks.

The format for the bureau's new retail report, which now just gives trend estimate figures rather than seasonally-adjusted and original measures as well, was the result of the Rudd Government's Budget cuts.

The sample size for the retail report has also been been cut by two thirds, which the bureau says will increase month-to-month volatility in the numbers.

However, the seasonally-adjusted numbers - preferred by economists and financial market traders - are available on the bureau's website.

It showed retail trade rose by a seasonally-adjusted 1.4 per cent in July.

Economists had forecast a seasonally-adjusted increase of 0.5 per cent.

Source: news.com.au
Date: 09/09/2008