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Construction activity has continued to fall, while there seems to be some improvement in the labour market, according to the latest data.
The Bureau of Statistics reported that residential building approvals plunged by 5.6 per cent, seasonally adjusted, between April and May.
Compared to one year ago, there was a drop of 19.7 per cent.
The worse-than-expected result was driven by a sharp downturn in higher-density apartment approvals - which fell by 12.1 per cent over the previous month.
In fact, economists were only expecting the May construction figures to drop by around 1.3 per cent (over the previous month), and 14.1 per cent (over the previous year).
The value of approved building work was also flat, with a 3.3 per cent fall in residential building, while non-residential building lifted by 5.3 per cent.
"With approvals trending lower since mid-2016, it is clear the housing construction cycle has topped out, for now anyway," NAB economist Tapas Strickland said.
"However, it still remains unclear how long the high levels of residential construction will persist for in the period ahead given a still large pipeline of work and continuing strong population growth."
Commonwealth Bank senior economist Gareth Aird believes the latest data is evidence of a "downward trend".
"The data reaffirms our view that residential construction will be a drag on economic activity from the second half of 2017 having supported GDP growth over the past few years."
On a more positive note, the latest monthly report from ANZ Bank showed a lift in job advertisements last month.
Job ads rose 2.7 per cent to 175,091 in June, seasonally adjusted - compared to a 0.4 per cent increase the month before that.
For the year to date, the number of job ads increased by 4.9 per cent.
"Business conditions, profitability and capacity utilisation have been rising or sitting at elevated levels for the better part of a year," said David Plank, ANZ's head of Australian Economics.
"The strength of ANZ job ads over the first half of 2017 indicates this is translating into a positive outlook for the labour market."
Mr Plank believes the strength of the labour market - particularly the unemployment rate dropping to 5.5 per cent in the May quarter - would be a "key factor" in stabilising, and possibly lifting, consumer sentiment to avoid downside risks to the economy.
He also commented that a strong labour market would mean the Reserve Bank could "effectively disregard the weakness of GDP growth" in the first half of the year.
Topics: economic-trends, building-and-construction, unemployment, business-economics-and-finance, australia