“Sell in May [by
the twelfth, as it happened] and go away” we observed at the start of the
month and how true it was. Where will the markets go now? Who knows, but
continued caution is advised. US shares rallied overnight after slightly
hawkish US Fed minutes were released.

Australia’s April
trade deficit was “better, but still awful” as some pundit put it on ABC TV. In
fact there was a fall from $1.5 billion in March to a “mere” $1.1 Billion in
May. Whoops of joy from Treasury, gloom from the rest of
us.

Correspondent Barrie O’Shea
reports on the building industry: “Our figures have shown an improvement in the
second half of the financial year after a fall in the first half. The building
market appears to be steady although some of our customers are reporting
difficulties. Most seem to have adequate levels of work. My feelings about the
market are supported by Building Commission figures which show that more
Registered Building Practitioners are forecasting a positive outlook than in
earlier years.

“Other businesses in the area seem
to have settled at lower levels of activity. There has not been an influx of new
businesses to replace those which failed last year and several buildings have
been unoccupied for some time.

“Our holiday included a wedding at
Port Douglas and a week in Noosa. In both locations, occupancy rates are down
substantially with special offers the order of the day and some empty shops in
Hastings
Street. Whether this relates to interest rates,
petrol prices, IR legislation or global warming making Melbourne more attractive
(hardly!), I cannot tell. I leave that to your more informed
analysis.”

Banking newsletter The Sheet
reports on the basis on new figures: “For the March 2006 quarter, Residex found
that property prices increased by 3.4%. Residex said property prices
increased by 5.8% over the year to March 2006.” These numbers come from
a different source and show a cheerier picture, unless you are struggling to buy
your first home.

Goldmembers can visit our Housing 2006 page for a justification of the Residex figures, especially important given the
RBA’s report on the variability of house price data. Goldmembers remember to
sign in.

Read more at Henry
Thornton.