Building approvals for May: -5.6% m/m .... miss

  • expected -1.3% m/m, previous (for April) was +4.4%

-19.7 % y/y ... miss

  • expected -14.1% y/y, prior -17.2%

More via ABS:

In seasonally adjusted terms, dwelling approvals decreased by 5.6 per cent in May, driven by a fall in total dwellings excluding houses (12.6 per cent), while total house approvals rose 0.4 per cent.

Trend terms:

  • "Dwelling approvals continue to weaken in trend terms, falling by around 700 dwellings over the past three months," said Daniel Rossi, Director of Construction Statistics at the ABS. "The May 2017 data showed that the number of dwellings approved is now 18 per cent below the peak in May 2016".
  • Dwelling approvals decreased in May in the Australian Capital Territory (8.2 per cent), Victoria (3.9 per cent), Western Australia (3.7 per cent) and New South Wales (2.6 per cent), but increased in Queensland (2.2 per cent), Northern Territory (2.1 per cent), South Australia (1.6 per cent) and Tasmania (1.5 per cent) in trend terms.
  • In trend terms, approvals for private sector houses were flat in May. Private sector house approvals rose in South Australia (1.0 per cent), New South Wales (0.4 per cent) and Victoria (0.2 per cent), but fell in Queensland (0.9 per cent) and Western Australia (0.6 per cent).

The value of total building approved rose 0.8 per cent in May, in trend terms, and has risen for five months. The value of non-residential building rose 4.6 per cent while residential building fell 1.5 per cent.

Although a miss on expectations the data today is not that much of a surprise in a bigger pic. view; I posted earlier in the preview to this data point:

The decent m/m result in April came after a very poor March result, down 13.4% ... a huge miss ... with many analysts citing poor weather as a major contributor. If that was the case the bounce in April looks a lot less impressive.

The bigger picture for this indicator is a slowdown, driven predominantly by high-rise/higher density developments. The downturn is moderate, but its been going on a while. The 'pipeline' of building work is diminishing (albeit from a high level).

  • Non-high rise approvals have firmed
  • High rise approvals have stabilised


Apartment/unit approvals fell hard again in May (see bolded bit):

  • The trend estimate for private sector houses approved was flat in May.
  • The seasonally adjusted estimate for private sector houses rose 0.6% in May and has risen for two months.
  • The trend estimate for private sector dwellings excluding houses fell 4.1% in May and has fallen for three months.
  • The seasonally adjusted estimate for private sector dwellings excluding houses fell 12.1% in May following a rise of 10.8% in the previous month.