Economists expect Australia’s housing sector to remain soft for a while longer after new data showed building approvals continue to decline.

Data released by the Australian Bureau of Statistics (ABS) on Thursday shows residential building approvals fell 1.0 per cent to 11,443 units in December.

In the year to December 2011, building approvals were down 24.5 per cent, the ABS said.

The figures were weaker than economists’ forecast of a 2.0-per cent rise in approvals for the month.

National Australia Bank senior economist Spiros Papadopoulos said the data showed building approvals had declined in eight of the past 12 months.

“It’s just further evidence of the weakness in housing activity at the present time,” he said.

He said the data showed that the Reserve Bank of Australia’s (RBA) decision to cut the official interest rate in November and again in December had not yet provided the hoped-for boost to the housing sector.

“New building activity is very soft and it indicates the housing market is going to remain fairly subdued for the next little while.”

He said the figures would add some weight to the case for a further interest rate cut in February.

The ABS also released its monthly trade data, which showed Australia’s trade surplus widened in December.

The balance on goods and services was a surplus of $1.709 billion in December, seasonally adjusted, compared with a downwardly revised surplus of $1.343 billion in November.

Total exports rose two per cent to 27.7 billion, the second highest level on record while imports were also up one per cent.

JP Morgan economist Ben Jarman said the past few months for building approvals had been volatile.

“That looks to be unwinding and we’re back to the old trend, which is gradually slipping building activity,” he said.

“It is really a restoration of the long-term trend, which is basically caused by structural factors like difficulties in planning and the tax codes rather than the housing market capitulating.

“It’s still hard to see those building approvals really taking off because if you look at a long run chart of building approvals and new home sales and they are in a long run decline.”

Mr Jarman said it is unlikely that the building approval figures will influence the Reserve Bank of Australia’s (RBA) interest rate decisions.

“I don’t think there is anything in this data that will trouble or inform the RBA next week, they’ll be focused on issues offshore,” he said.

Mr Jarman said the strong rise in exports in December was mainly driven by coal shipments.

“The exports are holding pretty steady amid the slowdown in Asia,” he said.

“There was a concern about China’s economy slowing down pretty sharply and it would be shown in the Aussie trade numbers but that hasn’t really happened.

“So we’re getting that income out of Asia despite the moderation in growth.

“On the imports side it is a little patchy and distorted by some things that are happening with automobiles because of some supply chain issues in Asia.”

Commsec economist Savanth Sebastian said the building approvals data indicated a market in the midst of long consolidation.

“If you look at approvals overall for the year, they were down by just shy of 25 per cent,” he said.

“The previous rate cuts should support activity over the next couple of months, but it’s going to be off a very low base.

“So I don’t think there’s going to be any robust housing activity anytime soon.

“If anything, it highlights that the housing sector is a huge multiplier for the Australian economy, and with momentum lacking in the housing sector, the Australian economy is effectively go sideways.”

The data would add another boost to the case for a rate cut from the central bank, Mr Sebastian said.

“It’s clear this week that the housing market hasn’t responded to the rate cuts that took place, and I would say they’ll be pushed to cut rates next week,” he said.

“The Reserve Bank (of Australia) won’t be overly perturbed, they know that rate cuts will start to have an impact in coming months, but I think the economy as a whole needs a further degree of support.”

On the trade surplus figures, Mr Sebastian said there was nothing surprising, given a long-term trend of surplus.

“We’ve had almost two years of consecutive trade surpluses,” he said.

“It highlights the strength of the Australian dollar at the moment.

“The money is certainly flowing into Australia, it’s just a matter of businesses and consumers not being willing to spend those dollars.

“The household savings ratio is holding at a 24-year high, so it’s going to take an improvement in the domestic economy and in confidence levels to justify a turnaround in activity.”

Significantly, a record monthly deficit of $1 billion in the net services sector was an indication of weakness in tourism and education, Mr Sebastian said.