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Felicity Emmett, senior economist at ANZ, notes that Australian residential building approvals fell 1.1% m/m in August, following a 9.7% drop in July.

Key Quotes

“Apartment approvals rose only a modest 1.5%, after the 19.7% slump in July, while house approvals fell 2.6%. Approvals are now running 21.5% lower than a year ago.”

“The value of non-residential approvals rose sharply in August (+54%), driven largely by strength in public approvals, which jumped AUD1.6bn. Private sector approvals also rose strongly and the trend is now firmly higher suggesting a near-term pick-up in non-residential construction.”

“The ongoing weakness in housing approvals points to further falls in residential construction over coming months. September should see a bounce given reports of some large apartment block approvals in Sydney, but the pipeline of activity elsewhere is diminishing. We do expect to see a broad-based improvement in approvals in coming months, but given the falls to date, construction is likely to remain weak for some time.”