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Monday, 4 February 2019

Building approvals point to...recession?

Swan dive

Quite conclusive, if not all that surprising, with building approvals crunched to under 14,000 in December 2018.

It's worth noting that these are seasonally adjusted figures - the original figures came in at just 12,000 in the quiet month of December. 

The monthly trend has gone from around 20,000 to 15,000 in double-quick time, and this before the impact of the Opal Tower fiasco, an apartment tower fire in Melbourne today, or Labor's negative gearing changes. 

No way to dress this up, with the leading indicators of both money growth and building approvals pointing towards weaker or even recessionary conditions over the period ahead (Australia can often dodge technical recessions due to its population growth, but let's fact it, these are quite dire indicators). 

Unit approvals in December fell to just 1,790 in Sydney, 1,390 in Melbourne, and 519 in Brisbane, and it's questionable whether even this smattering approvals will get off the ground in the prevailing environment.   

The rolling annual figures by capital city remain somewhat flattering, though collapsing fast. 

And annual detached house approvals are also falling in all major cities.

Stranger than fiction...

Gee whizz. 

The intriguing thing about this as an observer is that we have a government trumpeting a plan to accelerate the return to surplus and a central bank with an apparent tightening bias. 

'Interesting times'!


The final Royal Commission report is due out after market close at 4pm today.