After a volatile couple of months the Australian Bureau of Statistics has released the Building Approvals data for July which showed total dwelling units approved increased 2.5% seasonally adjusted, driven largely by a resurgence in private sector dwellings, excluding housing (that is units) which were up 5.9% during July.
Construction, and housing construction specifically, has been a bright spot in the economy over the past 6 months as the economic transition takes shape. The market was expecting an increase of about 1.5% for the total July number after the revised 3.8% fall in June. Private sector houses rose 1.4% during the month.
But while the number of houses and units being built rose strongly the valuation series showed the impact of the non-housing sector on the economy. The ABS reported that “the value of total building approved fell 10.4% in July after rising for two months. The value of residential building rose 0.8% following a fall of 3.2% in the previous month. The value of non-residential building fell 26.5% after rising for two months”.
Cameron Kusher from RP Data- Core Logic tweeted that building approvals are 8% lower than the January 2014 peak but this is a good number in terms of economic growth and the markets feeling for it.