The Australian Bureau of Statistics building approvals series today was overshadowed by RBA Governor Glenn Stevens speech and the unexpected fall in retail sales.
But while the trend data showed that the number of dwellings approved fell 1.7% in May, the fifth fall in a row, the seasonally adjusted data leapt an unexpectedly strong 9.9%. It’s first rise in four months.
Driving the big bounce in approvals according to the ABS was a very solid rise in “private sector dwellings excluding houses rose 27.2% in May after falling for three months”.
This stands in stark contrast to the much smaller 0.5% rise in houses which had also had three months of fall prior to this “recovery”.
In terms of the value of approvals the bounce was even stronger with the ABS saying that:
The seasonally adjusted estimate of the value of total building approved rose 26.1% in May after falling for four months. The value of residential building rose 13.5% after falling for three months. The value of non-residential building rose 59.5% after falling for four months.
But here is the big economic question.
Will approvals convert to actual dwellings built in the next 6 months or, with consumer confidence down and the economy hitting a flat spot, will they simply remain on the books as approvals.
If Australia’s recent run of weak data is any guide then the trend is your friend when it comes to building approvals.