Australian building approvals rebounded in November following two months of significant declines, according to data released by the ABS on Monday.
Total approvals increased by 7% to 17,569 in seasonally adjusted terms, leaving the year-on-year decline at 4.8%.
Economists had been expecting an increase of 4.5%, leaving the decline on the levels of a year earlier at 5.7%.
October’s fall, originally reported as a drop of 12.6%, was revised fractionally higher to a contraction of 11.8%, and followed a 10.3% decline in September.
The ABS said that approvals for private sector dwellings excluding houses — largely units — was entirely responsible for the bounce in the headline approvals figure, rising by 18.5% to 7,766.
However, despite the bounce in November, they remained some 8.9% below the levels reported a year earlier.
Partially offsetting the bounce in approvals excluding houses, private house approvals continued to soften, dropping 0.2% to 9,350.
That left approvals in this category down 2.9% from the same month in 2015.
While the seasonally adjusted figures are notoriously volatile due to the sharp increase in apartment approvals seen in recent years, the ABS said that approvals fell by 2.9% in trend terms during the month, the sixth consecutive fall in a row.
That’s reflected in the chart below which shows the rolling 12-month total for building approvals, breaking the figure down into those for houses and other dwellings approved.
According to the ABS, approvals totaled 232,599 in the past year, down 3.1% on the levels seen in the 12 months to November 2015.
Within that figure, there were 117,867 houses and 114,733 dwellings excluding houses approved. Compared to the numbers seen in the year to November 2015, that represents declines of 1.5% and 4.7% respectively.
Approvals numbers are clearly easing, although they still remain elevated to levels seen in previous years.
Mirroring the increase in total approvals, the value of work approved also bounced after plunging in October, recording an increase of 2.3% after seasonal adjustments. Previously it tumbled by 29%.
The ABS said the value of residential building increased by 5.6% — the first increase in four months — while the value of non-residential building fell 3.7%, the second decline reported in a row.
Within the residential component, the value of new residential approvals drove the increase, jumping 7.5% to $5 billion. The value of alterations and additions including conversions slid by 7.8% to $626 million.
Despite the bounce in approvals recorded in November, it followed two months of declines of more than 10% and was entirely driven by unit approvals which are notoriously lumpy in nature.
With forward looking indicators such as new orders in the separate Performance of Construction Index continuing to contract, it suggests that Australia’s residential construction sector has now entered a cyclical downswing.
The only real question now is how long will it take to see actual activity levels start to soften, and how sharp will that downturn prove to be.