There was a smaller than expected drop in building approvals for March off the back of a strong February as Covid-19 took hold of the economy.
According to the Australian Bureau of Statistics building approvals dipped in March by 4 per cent compared to February however the trend estimate was still on the rise by 1.3 per cent.
It was a mild impact for the month with 15,279 approvals in total, which was up 0.2 per cent compared to the same time last year, seasonally adjusted.
Also continuing to trend upwards were the value of new residential buildings up 0.5 per cent, alterations to existing buildings up 0.3 per cent and the value of non-residential buildings up 2.3 per cent.
However indicators from April suggest the tough times were yet to be recorded by the ABS with the construction industry index dropping to a new low in April due to slow activity on building sites, a drop in orders and unemployment on the rise.
Source: Australian Bureau of Statistics
ABS director of construction statistics Daniel Rossi said in trend terms the number of dwellings approved rose by 1.3 per cent following strong results in February.
“The rise was driven by private sector dwellings excluding houses, which rose 2.8 per cent, in trend terms. Private sector houses also rose 0.2 per cent,” Rossi said.
“This result indicates that in March, there was no evident impact on building approvals from Covid-19, however the ABS is monitoring for potential impacts in coming months.”
Commsec senior economist Belinda Allen said the 4 per cent fall in residential building approvals in March was smaller than expected.
“Consensus and CBA had expected a larger 15 per cent fall after a strong 19.4 per cent gain in February,” Allen said.
“This data series can be volatile, driven by the lumpy nature of multi-unit approvals.
“The trend data shows that in the first quarter of 2020 building approvals were on a slow upward march.”
BIS Oxford Economics economist Marree Kilroy said nationally the results were varied.
“Recent growth in attached dwellings, concentrated in Victoria has taken a breather, falling 8 per cent nationally,” Kilroy said.
“A more modest 1 per cent decline in houses was recorded for the second month in a row despite New South Wales rising 7 per cent.
“Given approval processing time, the Covid-19 shock has yet to really show through in the approval data.
“Dwelling approvals are expected to weaken over the remainder of 2020 is response to significantly weaker demand for new dwellings.”