Australia: Weakness in dwelling approvals continues - Westpac

Matthew Hassan, analyst at Westpac, notes that Australian dwelling approvals fell 4.7% in April, a significantly weaker than expected result while the consensus was looking for a flat month, and Westpac a small 1% decline.

Key Quotes

“Note that revisions softened the choppy Jan-March profile with last month's 15.5% drop pared back to a 13.4% decline.”

“The timing of holidays this year may have exacerbated the decline - with Easter falling into April and a weak prior to the ANZAC day long weekend many workers may have opted to take leave through this period, reducing the number of 'effective working days' in the month. While the ABS tries its best to control for seasonal anomalies, the rarity of this conjunction makes the task difficult.”

“Notably, the detail shows weakness outside 'high rise' segments. Detached house approvals fell 2.6%mth to be down over 20%yr, the pace of declines accelerating slightly in early 2019. Private units recorded a large 6.5% fall but the detail here points to 'low rise' was the driver this month rather than 'high rise'. Total approvals ex high rise (covering both detached houses and mid-low rise) looks to be down 3.5% in the month.”

“Overall the update again points to weakening momentum, the composition pointing to a weaker construction profile through the middle of the year.”