Building approvals have not yet bottomed out: Westpac

Building approvals could decline even further, with the 7.8% decline in February possibly signalling the start of a “renewed deterioration”, according Westpac senior economist Matthew Hassan.

 “The Feb building approvals report suggests construction activity remains under pressure. Indeed whereas previous reports had pointed to a bottoming out after a sharp decline through most of 2011, the Feb data casts major doubt on that assessment and could even signal the start of a renewed deterioration,” Hassan says.

“The total number of new dwellings approved fell sharply, down 7.8% to be at its lowest level since May 2009.

“That was much weaker than the market expectation of a 0.5% gain. If that forecast had come to pass, approvals would essentially have moved into a trend flattening. Instead, the weak February read maintains the relatively rapid trend decline at 1.5% per month, an annualised pace of 16.7%,” he says.