The Building Approvals data for May would appear, on the face of it, to be very strong. The market had been expecting a rise of about 3.2% m/m in the seasonally adjusted data. Instead the result came in at +9.9% (+14.3% y/y). However, the strength is primarily down to very strong unit approvals which tend to be highly volatile; house approvals rose just 54 (or 0.6%) on the month while unit approvals surged by 1,421 (+25.5%). The ABS Trend series might give us a somewhat clearer picture and here we see a monthly decline of 1.7% (+11.5% y/y) which is the 5th consecutive monthly fall in the Trend rate. Approvals are still a good deal stronger than a year ago, but the rate of increase is rapidly falling.
In Queensland we see a similar picture. Seasonally adjusted data shows a massive 45% increase for the month (after 3 consecutive monthly declines) and a 30.2% y/y increase. However, here too unit approvals are distorting the data. House approvals rose by 87 while units increased by 920. The ABS Trend series for QLD shows a 3.2% decline for the month (the 6th such consecutive decline) for an increase of just 6.4% on the year. This annual rate of growth has now fallen from a high of 40.3% in Nov last year; clearly the building recovery in QLD is rapidly running out of steam!
Unfortunately here in the Far North things are also looking a little weaker. In Cairns unadjusted data showed 53 approvals (up from 40 in Apr) but the Conus Trend series remained unchanged at 46 (following a sharp downward revision to previous months). The Trend rate now sits 2.1% below its level a year ago.
In Townsville unadjusted approvals for May were 116 (up from 93 in Apr) and the Conus Trend rose slightly to 105 (from a downwardly revised 104 last month). The Trend is now 18.3% below where it sat a year ago.
The only bright light in the region is the Cassowary Coast where unadjusted approvals came in at 11 for the month. The Conus Trend remains unchanged at 10, although this follows positive revisions to previous months. The Trend in May was 25% above the level a year ago. Once again approvals came largely from the Tully area (which includes Mission Beach and Cardwell) with 8 houses getting the go ahead.