In this week’s Data Wrap we briefly review the key data releases from last week that have particular relevance from a South Australian economic perspective. These partial indicators of economic activity point to ongoing solid demand growth in South Australia, while results from the latest winegrape crush survey indicate that South Australian winegrowers had a positive vintage last year.
Building approvals continue to rise
Latest building approvals data from the ABS indicates that approvals for South Australia continue to grow, although they remain a little below their previous peak reached in April 2016 after they fell sharply through the middle of 2016.
The total value of South Australian building approved rose by 1.9 per cent in June in trend terms, to be 5.3 per cent higher compared to a year earlier. In comparison, the total value of building approved nationally rose by 1.3 per cent in June, but was still 2.6 per cent lower compared to a year earlier. National building approvals rose to a record high level in mid-2016 before falling in the second half of 2016. South Australian building approvals have followed a similar pattern, although the decline occurred slightly earlier.
The increase in the total value of building approved for South Australia in June was driven by a solid increase in the valued of total residential building approved (up 3.0 per cent), while the value of non-residential building approved was also a little higher (0.4 per cent). Residential building approvals remain at a quite strong level by historical standards.
Retail sales continue to grow at a solid pace
Data released by the ABS last Friday indicates that retail spending in South Australia continues to grow at a solid pace. The volume of retail sales in trend terms for South Australia rose by 1.2 per cent in the June quarter, outpacing a 0.8 per cent rise at the national level. This latest result follows relatively stronger growth in retail volumes for South Australia compared to the nation in the March quarter (1.0 per cent compared to 0.7 per cent).
The monthly estimates of retails sales, which are only available in value terms, suggest that growth in retail sales for South Australia had become synchronised with national spending patterns by the end of the June quarter. The trend value of retail turnover rose by 0.4 per cent in June for both South Australia and Australia. This synchronisation was brought about by a slowdown in growth for South Australia in June.
South Australian winemakers have a good vintage
Wine Australia released the results of the South Australian Winegrape Crush Survey for the 2017 vintage on 2 August. The latest results provide positive reading with both production and prices showing a further improvement in 2017.
The total crush of South Australian winegrapes for the 2017 vintage was estimated to be 863,789 tonnes, which represents a 5.6 per cent increase compared to 2016. The 2017 result represents the fourth consecutive increase in crush and was 22 per cent above the previous decade average level. While the 2017 crush was quite strong by recent historical standards, it remained short of the previous highs recorded in 2004 (920,194 tonnes), 2005 (898,165 tonnes) and 2006 (904,022 tonnes)
A further encouraging sign, especially for grape growers, is that the increase in production was accompanied by an increase in the average purchase price. The average purchase value per tonne was $680 in 2017, up 7.8 per cent from an average value of $631 in 2016, and 22 per cent higher than the average purchase value of $557 in 2015. The change in average purchase value would in part reflect changes in the composition of grape varieties crushed, while there can also be substantial variations in average prices received by variety and region. For example, the average price received for Barossa Shriaz rose slightly in 2017, continuing its strong upward trend over the past 6 years, while the average price for Coonawarra Cab Sauvignon fell sharply.
The National Vintage Report indicates that the average winegrape purchase value for 2017 was the highest since 2008.