Building approvals surged in January to the highest level in more than a decade, a powerful sign the construction industry is set for a major upturn in 2014.
Approvals for new dwellings jumped 6.8 per cent from December to be almost 35 per cent higher than a year ago, according to the Australian Bureau of Statistics. Economists were counting on a gain of just 0.5 per cent.
The figures were published as Reserve Bank of Australia board members convened in Sydney, where they are widely expected to keep the official cash rate at a record-low 2.5 per cent. More than two years of interest rate cuts are increasingly showing signs of gaining traction across the economy.
Alongside the sharp rebound in building approvals, recent reports have shown demand for labour is set to strengthen in coming months, house prices have risen and commodity prices are up.
Some 17,514 dwellings were approved in January, the biggest jump since 2002 and one of the strongest monthly gains in records dating back to mid-1983.
The increases were broadly based, with starts for detached housing up 8.3 per cent and units by 4.6 per cent.
Rising approvals is one of the clearest signs to date that the Reserve Bank’s monetary policy is starting to work. The bank slashed the cash rate by more than 2 percentage points from late 2011 to help spur non-mining sectors of the economy.
Separate ABS figures showed the current account deficit narrowed in the fourth quarter to $10.1 billion from $12.5 billion, as exports of goods and services surged.
The ABS said the surplus was expected to boost December quarter gross domestic product – to be released Wednesday – by 0.6 percentage points.
The Australian dollar jumped more than half a US cent, to US89.45¢ after the reports were released.
By Jayden Vecchio Google+