The Australian home building boom remains on track, as the Reserve Bank has been suggesting now for the past year.
But on face value, February’s building approvals report from the Australian Bureau of Statistics was disappointing with a 5% fall in seasonally adjusted terms in the month.
But as the fall came after a 6.9% rise in January, it was expected by many forecasters.
The news didn’t impact the value of the dollar – it traded well over 92 USc for all of yesterday.
More important though was the 0.7% rise in trend term in approvals, which mean they have now risen for 26 months in a row.
In fact total approvals are up 23% in the year to June, with private home building approvals up 22% and non-private dwellings up a substantial 32.7%.
In February 2013, the annual growth rates were 12.8% for all approvals on February 2012 (a solid rise, but at the time doubted by many); private housing was up a weak 2.3% (but better than the falls seen in 2012) and non-private dwelling approvals were up 24%.
In fact the main driver for the 5.9% seasonally adjusted fall in February was an 8.7% drop in approvals for non-private dwellings (units, apartments, townhouses, etc).
The latter is always a lumpy, volatile part of the seasonally adjusted statistical series and one to ignore and look at the trend performance (which is designed to try and smooth out such month to month swings).
Building approvals are about as strong as they ever get
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Source: ABS, AMP Capital
The AMP’s chief economist Dr Shane Oliver said yesterday, "The key though is that the trend in approvals remains very strong with building approvals now around past cyclical highs.
"The surge in approvals over the last year is foreshadowing a boom in dwelling construction this year which will go a long way to helping the economy rebalance away from its excessive reliance on mining investment for growth."
The ABS said that in trend terms dwelling approvals "increased in the Australian Capital Territory (7.9%), Victoria (2.2%), Western Australia (2.1%), Tasmania (1%) and South Australia (0.4%) but decreased in trend terms in the Northern Territory (20.8%), Queensland (1.2%) and New South Wales (0.2%).
"Approvals for private sector houses in trend terms rose 1.9% in February, rising for the fourteenth consecutive month. Private sector house approvals rose in trend terms in South Australia (3%), Victoria (2.1%), New South Wales (1.7%), Western Australia (1.4%) and Queensland (1%).
"The value of total building approved rose 0.2% in February, in trend terms, and has risen for eight consecutive months. The value of residential building rose 0.2% while non-residential building rose 0.3% in trend terms," the ABS said.
Today it’s the retail sales data for February with the market expecting a slowing from the hectic 1.2% growth rate reported for January, seasonally adjusted, while the trade data is tipped to show another surplus, but it could be lower than expected because of falls in iron ore and coal prices and the rise in the value of the Aussie dollar.
And yesterday saw the latest job vacancies data from the federal government and they showed a 2.6% gain in job vacancies over the the 3 months to February.
That was the first gain in 2 years, and supports suggestions from other labour force indicators such as the ANZ job ads, skilled vacancies and the NAB monthly business survey employment plans.
It also tends to support the message from the strong January jobs data from the ABS, and Dr Oliver says the figures point to "a stabilisation and possible improvement ahead in the jobs market”.
That was also a message the RBA’s senior officials have started making (hesitantly) in recent statements and commentaries.
