Aside from engineering and architectural design, one of the earliest requirements of a building project is to obtain approval from the relevant statutory body. While not all projects which have been approved are completed, all completed projects have been granted approval. Approvals data thus provides a useful indicator of future construction activity.
The latest building approval figures have been released for December by the Australian Bureau of Statistics and they indicate the downtrend which started in July had continued. Seasonally-adjusted, total approvals fell by 8.4% in December, which is well under the market consensus figure of +2.0% but an improvement on November’s revised figure of -9.8%. On an annual basis, total approvals fell by 22.5%, as compared to November’s comparable figure of -33.5% after revisions.
Local financial markets’ reactions were modest but there was also an ANZ Job Ads report and a Melbourne Institute Inflation Gauge report with which to contend. By the end of the Australian trading day, 3-year, 10-year and 20-year Treasury bond yields were all 2bps higher at 1.74%, 2.23% and 2.60% respectively. Cash futures prices were essentially unchanged and a bias towards a rate cut in late 2019 or early 2020 remained in place. The Aussie dollar finished the afternoon session about 0.2 US cents lower at 72.30 US cents.