Building approvals are up for the first time since September, a sign the sector is set for a sustained recovery that will help offset a downturn in mining construction.
Approvals for the construction of new homes rose 6.8 per cent across Australia in January, seasonally adjusted figures show, beating economists’ forecasts of a 0.5 per cent rise.
Private sector house approvals rose 8.3 per cent in the month, and the “other dwellings” category, which includes apartment blocks and townhouses, was up 4.6 per cent, the Australian Bureau of Statistics said.
“It was a pretty decent jump in approvals in the month of January,” RBC Capital Markets senior economist Su-Ling Ong said.
“That underlying trend continues to strengthen and the composition was very good as well.
“It was driven by a rise in approvals for private sector houses.”
Commonwealth Bank economist Gareth Aird said the new figures confirmed a recovery in home construction was part of a long-term trend.
“The data indicates that a pick-up in non-residential construction is also coming over the period ahead – one of the necessary offsets to the downturn in mining construction,” he said.
St George Bank economist Janu Chan said lower interest rates had boosted the residential housing sector.
“It’s an encouraging sign that residential construction is going to provide that strong contribution to growth this year,” she said.
“It will assist in filling the (mining investment) gap and the RBA has been looking for non-mining parts of the economy to start picking up and this is further evidence this will be occurring.”
All states recorded strong monthly building approval figures.
The upbeat data also sparked a quick Australian dollar rally.
The local unit peaked at 89.57 US cents not long after the data’s 11.30am (AEDT) release, which was up from Monday’s level of 89.24 US cents.