The Building Approvals data for July has come in slightly better than expected; at the same time we have seen positive revisions to last month’s weak data.
In July total approvals nationwide rose by 4.2% seasonally adjusted (expected +2.9%) with the 8.2% decline in June being revised to a 5.2% fall. The year/year growth is now at +13.4% (down from +13.5% in June). The stronger than expected data has been driven by a sharp uptick in unit approvals (+11.7% m/m) while house approvals fell (-2.6% m/m). The Trend series (which aims to smooth out this kind of volatility) fell 0.7% m/m (the 5th consecutive monthly decline) and was up 13.8% yr/yr.
In Queensland (after a stellar performance in June) it is no surprise to see things slip in July. Total approvals (seasonally adjusted) fell 17.2% m/m for a 2.2% yr/yr increase. Worth noting that the very strong data from June was revised even stronger this month with the m/m increase up to +21.4% (from +16.3%) and yr/yr to +33.5% (from 28.0%). Here too the volatile unit sector is the culprit for the numbers with houses down just 0.6% m/m while unit approvals fell 31.4% m/m. The Trend series shows a m/m decline of 0.8% (also the 5th consecutive month of decline) for a 12.0% yr/yr increase. The graph below makes clear the turn around in the Trend series both nationally and at the state level.
Regional approvals data will be released next week at which time we will update our own Conus Trend series for Cairns, Cassowary Coast and Townsville.
In other news today, the Balance of Payments deficit in the second quarter of $19.0bn will be deducting 0.6% from Q2 GDP to be released tomorrow. Expect to see forecasts for GDP being revised down….we might even be looking at a negative number for the quarter.