House approvals drop from April’s record

House building approvals dropped by more than 10 per cent in May, retreating from the record high posted a month earlier.

Australian Bureau of Statistics figures showed approvals for private sector houses fell 10.3 per cent in May to 13,571.

Unit approvals declined 7.1 per cent to 20,163.

ABS spokesman Daniel Rossi said private house approvals remained at elevated levels despite the decline in May.

This year’s figure was 55 per cent higher than May 2020 and 57 per cent higher than at the same time the previous year.

The expansion in Australia’s construction sector also continues to slow from a record pace earlier in the year, constrained by rising material prices and difficulty finding workers.

The Australian Industry Group/Housing Industry Association performance of construction index fell 2.8 points in June to 55.5 after hitting a peak in March.

Still, an index reading above 50 points indicates the sector is expanding.

New orders remained at very healthy levels, indicating further expansion in the months ahead. 

“Employment continued to grow although its pace eased with the builders and constructors reporting increasing difficulty filling positions,” Ai Group executive Peter Burn said. 

Activity across house building, engineering construction and commercial construction rose in June, but activity in the apartment sector slipped.

HIA economist Tom Devitt said constraints on migration during the pandemic were hampering demand for apartments.

“This sector has been central to economic activity in Sydney and Melbourne for much of the past decade,” he said.

The ABS has also released its final retail trade data for May, posting a 0.4 per cent increase, larger than the preliminary result of a 0.1 per cent rise.

Spending in May was impacted by the latest Victorian snap lockdown, which saw retail sales in the state decline 0.9 per cent.

Separately, ANZ’s job advertising series showed a further three per cent rise in June, a record 13th consecutive monthly increase, pointing to further labour market strength in coming months.

ANZ senior economist Catherine Birch said while the outlook for the jobs market is positive, the recent lockdown in Victoria and ongoing lockdowns and restrictions in other parts of the country may limit further employment gains in June and July.

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