Australian residential building approvals rose 6.4 per cent

Australian residential building approvals rose 6.4 per cent to 12,046 units in August, although the increase followed a steep fall the month before, which left approvals subdued overall.

The data – released by the Australian Bureau of Statistics – shows the figure for August compares with an upwardly revised 11,325 units in July, seasonally adjusted.

JP Morgan economist Ben Jarman said the August data indicated a readjustment from the earlier weakness.

‘‘It was a bit stronger than the market expected, but given it comes after a 20 per cent decline in July, I just think it really establishes the old levels which prevailed in previous months,’’ he said.

‘‘The underlying trend is very soft – we had some new home sales data yesterday which confirmed that.’’

Industry figures out this week showed sales of new homes hit a 15-year trough in August while turnover in all home sales is a third lower now than the average of the previous decade, draining demand for household goods such as furniture and fridges.

In the year to August, building approvals were down 15.4 per cent, the ABS  said.

Westpac senior economist Matthew Hassan said the August rise was a positive development, but the data series was extremely volatile.

‘‘It’s really a dog’s breakfast so it’s very difficult to get a fix on how underlying momentum is travelling,’’ he said.

‘‘At best I think we’ve got a slight up-trend evident in private sector house approvals, but it doesn’t suggest we are into a very strong cyclical upturn.’’

Economists’ forecasts had centred on a 4.7 per cent rise in approvals for August.

‘‘Building approvals are still a soft result overall, although a volatile medium-to-high component has driven the increase this month, but the underlying trend still looks very soft and one that says rate stimulus is only working through the economy very slowly,’’ said Michael Blythe, the chief economist at the CBA.

Building approvals have been extremly volatile in the past few months as the bunching of large apartment projects caused a huge spike in May followed by a steep drop off in July.

Overall, approvals remain historically weak but analysts assume past, and future, rate cuts will encourage a revival over time.

AAP, Reuters