Housing grows again on back of low rates
Low mortgage rates and pent-up demand are helping spur strong price growth in housing.
Dwelling prices across the capital cities rose by an average of 1.6% in October, according to data published by RP-Data-Rismark on Friday.
Annual house price growth lifted to 7.9% in the year to October, the fastest pace in more than three years.
House prices are growing fastest in Sydney.
Sydney is also the only capital city to record annual house-price growth in the double digits. House prices in Sydney have now surpassed its previous cyclical high.
Leading indicators of housing and fundamental factors suggest that national house prices should continue to lift over the medium term.
In separately published data, producer prices rose by 1.3% in the September quarter at the final stage of production, which is the fastest quarterly pace in three years.
We expect inflationary pressures to remain contained, despite this sizeable increase of price pressures in the wholesale pipeline.
The AiG performance of manufacturing index rose to 53.2 in October, from 51.7 in September, indicating an expansion of manufacturing activity.
The US stockmarket gained ground boosted by upbeat manufacturing data in the US and China. The Dow rose 0.5%, the S&P 500 gained 0.3% and the Nasdaq was up 0.1% for the session.
US government bonds fell (yields rose) with strong US October factory data prompting hopes the sector had weathered the government shutdown successfully.
The Aussie dollar fell to a three-week low of 94.22 US cents. The US dollar gained ground against the major currencies, with the US dollar index rising to a six-week high, boosted by better than expected US manufacturing data.
The Euro softened against the US and Aussie dollars on renewed expectations the ECB may ease further. The NZD strengthened versus the Aussie dollar on comments from RBNZ Governor Wheeler that the OCR will need to rise from next year by 200bp (not new information, but a reminder nevertheless).
Commodity prices were generally weaker, with a lower oil price leading the way on a stronger US dollar and expectations of increased oil inventories.
The official manufacturing PMI for October beat market expectations, rising to an 18-month high of 51.4. In September, it stood at 51.1.
The HSBC/Market manufacturing PMI also rose in October and beat expectations. Both indices indicate that manufacturing activity strengthened in October.
The official non-manufacturing PMI rose to 56.3 in October, from 55.4 in September, indicating expansion in non-manufacturing activity has picked up further. This was the highest level in 13 months. The government's full-year GDP target of 7.5% remains within reach.
The manufacturing PMI edged down to 56.0 in October, from 56.3 in September. It still remains well above the 50 level, indicating ongoing expansion of manufacturing activity, albeit at a less rapid pace.
The ISM manufacturing index edged up to 56.4 in October, from 56.2 in September, its highest in two and a half years.
St. Louis Fed President Bullard said the payrolls jobs growth and unemployment declines over the past year could support the case for tapering of Fed asset purchases, but that he would want to see inflation back towards the target first.
He also noted QE-fuelled bubble concerns. Philadelphia Fed President Plosser warned the Fed has to "think about what could go wrong".