Today’s release of Building Approvals in January has surprised the markets with a seasonally adjusted 7.9% increase (against expectations of a 1.8% decline). In addition previous months have been revised sharply higher. The seasonally adjusted annual growth figure is now 9.1%, slightly weaker than the 9.6% rate of Dec (although this was revised from +8.8%). Unit approvals, as usual, have a highly confusing effect on the data and this month we see unit approvals up 1447 (or +17.5% m/m); house approvals actually fell slightly (-0.4% m/m).
However, when we consider the Trend series (as we should) we see a 1.3% m/m increase and 5.0% growth over a year ago; this compares to growth of 3.3% for the year to Dec (revised up from 2.1%).
The scale of volatility in the seasonally adjusted data can be seen in relief when we consider the Queensland data. Here we see an unbelievable 47.8% increase for the month and a 50.8% jump over the year. These exceptional numbers are all down to unit approvals. In Queensland we saw an extra 1564 unit approvals (up 103.2% m/m!); these approvals alone more than account for all the increase seen nationally over the month. House approvals were up just 63 (+3.3% m/m). Again, the Trend should be our friend here. Trend approvals in Queensland were up 2.6% m/m (and Dec revised to +2.8% from +0.8%) and +8.0% yr/yr (from +1.4% in Dec which was revised from -5.7%).
Whichever way you look at it, these are significantly stronger numbers than anticipated; especially for Queensland which had been going through a relatively weak patch for the construction sector. Time will tell if this is merely a statistical glitch or whether we are finally starting to see house building in Queensland strongly recover.