All about business

Australia's building approvals fell the most in five years in December and business confidence weakened, signaling today's interest-rate increase by the central bank may be its last.

Permits granted to build or renovate homes slid 16 percent from November, the statistics bureau said in Sydney today. The decline was four times more than economists forecast. An index measuring business confidence dropped to a one-year low in the fourth quarter, National Australia Bank Ltd. said separately.

Retail-spending growth cooled to 0.5 percent in December from 0.8 percent in November, another sign that the fastest economic expansion in three years is beginning to slow. Even after today's reports, the central bank raised it benchmark rate by a quarter point to 7 percent, its 11th increase since 2002.

Housing construction may be “succumbing to the Reserve Bank's long tightening campaign,'' said Brian Redican, a senior economist at Macquarie Research in Sydney. The decline in approvals, if sustained, reduces the risk that the central bank will raise interest rates again after today's move, he said.

The Australian dollar traded at 90.69 U.S. cents at 4:04 p.m. in Sydney from 90.68 cents before the reports were released.

Governor Glenn Stevens and his board increased borrowing costs to curb the fastest inflation in 16 years. Underlying inflation accelerated to 3.8 percent in the fourth quarter from a year earlier, a Jan. 23 report showed.

Building Approvals

Building approvals fell by the most since November 2002 in December, today's report showed. The median estimate of 25 economists surveyed by Bloomberg News was for a 4 percent drop no teletrak payday loans. Permits granted to build private houses declined 11.6 percent and approvals for apartments and renovations slumped 25 percent.

As well as today, the central bank raised the overnight cash rate by a quarter point in both August and November. Each increase added about A$42 ($38) a month to the average $250,000 home loan, according to the Housing Industry Association.

An index of business sentiment fell 3 points to 6 in the fourth quarter from the previous three months, National Australia Bank said today. A reading above zero shows those expecting their industry to improve in the coming quarter outnumber those predicting a deterioration.

Corporate confidence declined on concern higher interest rates and slowing global growth will curb sales. That may prompt businesses to pare hiring and investment.

The 0.5 percent increase in retail sales in December was less than the median forecast of 0.6 percent in a Bloomberg News survey. Sales have risen in each of the past seven months, the statistics bureau said today.

Consumer spending was the main driver of the economy's 4.3 percent expansion in the third quarter from a year earlier, the strongest annual growth since 2004.

“Looking ahead, sales will likely moderate as consumers feel the pinch of still-elevated petrol prices, falling share prices, and rising interest rates,'' said Helen Kevans, an economist at JPMorgan Chase & Co. in Sydney.

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