/www.bloomberg.com/ By Victoria Batchelor
Sydney, Feb. 3 (Bloomberg) -- Australian building approvals rebounded in December from a record slump as rising employment and interest rates near a 30-year low underpinned demand for housing.
Approvals rose 2.2 percent from the previous month, the Australian Bureau of Statistics said. The median forecast of 20 economists surveyed by Bloomberg News was for approvals to be unchanged following a 26 percent slump in November.
A housing boom helped the economy grow at almost 4 percent in 2002. Growth will weaken to 3 percent this year the boom eases and a global economic slowdown crimps exports, according to a Bloomberg News survey of 18 economists.
``Sustained low interest rates and a relatively healthy labor market for much of the year,'' will help support housing, Su-Lin Ong, senior economist at RBC Capital Markets, said before the report was released.
The economy added 52,100 jobs in December, capping the strongest year of employment growth since 1989. The unemployment rate was 6.2 percent at the end of last year, down from 7 percent at the beginning of the year.
The Reserve Bank of Australia, which raised its benchmark cash rate target a half percentage point last year to 4.75 percent from a 30-year low, reviews borrowing costs tomorrow.
Interest Rates
The central bank is expected to keep rates unchanged until at least the fourth quarter of this year, according to the median forecast in a Bloomberg News survey of 21 economists.
``Given that interest rates remain near record lows and employment growth is strong, this points to housing activity holding up reasonably well in 2003,'' Bill Evans, general manager of economics at Westpac Banking Corp., said before the report was released.
The Australian dollar and government bonds were little changed after the report. The currency bought 58.49 U.S. cents at 11:43 a.m. in Sydney. The yield on the 6.5 percent bond maturing in May 2013 was 5.21 percent, unchanged from before the report, and 3 basis points higher than the Friday closing level. A basis point is 0.01 percentage point.
The rise in building approvals in the month was led by approvals for apartments and alterations and renovations to existing buildings, which increased 4.1 percent in December from the previous month. Approvals to build private houses gained 3 percent.
Today's building report showed 13,534 new dwellings and renovations, worth A$3.76 billion ($2.2 billion), were approved by local government authorities in December.
Building approvals in December were 3.3 percent lower than a year earlier.