Economy facing slump

Approvals signal a slowing housing sector and broader risks

A SHARPER than expected fall in approvals for construction of new homes last month and a slip in non-residential approvals point to a potential decline in broader economic growth.

Dwelling approvals dropped 5 per cent in April, the Australian Bureau of Statistics said yesterday, compared with analyst forecasts of a 3 per cent decline.

Approvals were still up about 2 per cent annually, but are far weaker than the double-digit increases seen last year.

A home building boom had supported the economy in the past four years, but slowing approvals suggested that was EVERY minute, smokers get through almost 11 million cigarettes and 10 die from the habit, experts say, in an industry that generates billions of dollars.

The figures have been released for today’s World No Tobacco Day and it is clear that smoking is still big business.

Cigarette sales are worth more than $680 billion annually, according to Euromonitor.

China is the leading producer of tobacco, growing about 40 per cent of world’s leaves, says The Tobacco Atlas. running out of steam, economists said.

AMP economist Diana Mousina expects house prices in Sydney and Melbourne to ease another 5 per cent or so this year, with further declines likely next year.

“Over the past few years, the strong gains in home prices have allowed households to draw down on savings, which has been positive for consumption,” Ms Mousina said.

“But looking ahead, the sav-

Five firms control 80 per cent of the global cigarette market.

The top six made a profit of more than $62 billion in 2015.

There are about one billion smokers in the world, about a seventh of the global population, according to World Health Organisation and other respected estimates.

China has the highest number: of its population of 1.3 billion, about 315 million are smokers.

They consumed more than a third of the world’s cigarettes, the WHO said in a report last year. ings ratio is unlikely to move significantly lower, which is a constraint for consumer spending.

“A weakening consumer is a large downside risk for the Australian economy.”

UBS analysts downgraded their house price forecast yesterday, expecting values to drop 5 per cent or more over the next year from their longheld view of flat to a 3 per cent fall.

The outlook means the Reserve Bank of Australia will likely keep rates at a record low of 1.5 per cent.

“We continue to expect the RBA will hold until at least the second half of next year, but given the downside risks to our housing and consumer outlook, the RBA could remain on hold for even longer,” UBS chief economist George Tharenou said in a note.

“The surprisingly weaker trend in non-residential building approvals is important to highlight, as if it is sustained it could suggest momentum for business investment is rolling over.”

Approvals for commercial properties slipped for a second straight month in April, down 4 per cent. They are down almost 20 per cent in the past 12 months.

“The recent downturn in approvals is challenging our outlook for ongoing strength in non-residential activity,” ANZ economists said.