Building Approvals Rise Strongly
South Australian building approvals rose strongly once again in August, which suggests that activity in the local construction sector should remain quite solid through the remainder of the year. The trend estimate of the total value of building jobs approved rose by 6.9 per cent in August to be up 35 per cent compared to 12 months earlier. In comparison, national building approvals have been stagnant. The latest national data from the Australian Bureau of Statistics (ABS) indicates that the total value of building jobs approved fell by 0.3 per cent in August, and was down 1.2 per cent through the past year.
The strong result for South Australia in August was brought about by a significant increase in the value of non-residential buildings approved (up 14 per cent). There was also a small increase in the value of total residential buildings approved (up 0.5 per cent).
While the value of South Australian approvals has risen strongly, the number of approvals has grown more modestly. The number of building approvals in trends terms for South Australia rose by 0.9 per cent in August, but was still up strongly over the past year (by 12 per cent). Despite the solid increase in the number of building approvals over the past year, the number of approvals remains below previous peak levels. For example, the number of approvals in August was 6.3 per cent lower compared to its previous peak reached in March 2016.
Retail sales weaken
South Australian retail sales have entered the new financial year on a weaker footing, according to data released by the ABS last Thursday. The trend estimate of retail turnover for South Australia fell by 0.1 per cent in August following a flat result for July. In comparison, national retail turnover rose by 0.1 per cent in July and August respectively.
While trend estimates suggest that national retail sales grew weakly in August, seasonally adjusted data paint a quite different picture. National retail turnover fell by 0.6 percent in August in seasonally adjusted terms, its largest drop since March 2013. Moreover, the decline was broadly based with every state and territory recording a fall in retail turnover.
It is too early to tell whether the latest August seasonally adjusted results represents the emergence of a weaker trend in retail spending. However, the deterioration is consistent with sluggish wages and high household debt levels. Large price increases for electricity from the start of the financial year would also have squeezed discretionary incomes in some states including South Australia.