This just in from Shane Oliver, AMP Capital’s chief economist, on today’s big miss on building approvals. Analysts’ expectations were for a 2% lift but the number came in at -6.9%.
It’s a disappointment in the current environment where the search is on for the non-mining sectors of the economy to be picking up steam.
In an email Oliver says there are other indicators that point to the construction sector heading in the right direction:
The sharp fall in building approvals in June was clearly disappointing and underlines how sluggish the response to lower interest rates has been in the current economic cycle. However, it’s not disastrous. The bulk of the fall was in private multi unit dwellings which are always very volatile. The more reliable and less volatile approvals for private houses fell only 1.2% and is tracing out a rising trend. Moreover other leading indicators of housing related activity such as household assessments as to whether now is a good time to buy a dwelling, new home sales and auction clearance rates all point to a rising trend in building approvals. The trouble is that it really needs to be stronger to help offset the fading mining boom.
So not a disaster, but the hunt continues for evidence of solid results.
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