Australian building approvals have surprised median expectations for four months on the trot, and by a truly remarkable margin in January (median -2.0%, actual +7.9%).This left total approvals at a new all-time high (since 1983), and up by 8.2% in January versus the Q4 average.
Given the steady increase in the proportion of multi-unit buildings, for which approvals are substantially more 'lumpy' and hence volatile compared with private sector houses, a sizable pull-back in February seems highly likely.
Societe Generale says that the approvals data continue to point to solid growth in residential construction activity in coming months and quarters, which is vitally important as a counterweight to the rapidly declining investment in mining.
