Now here’s a bit of nasty news for the Reserve Bank and others – the value of construction work done across Australia in the final three months of 2018 fell by a sharp 3.1% to $51.603 billion (seasonally adjusted) instead of rising by 0.4% as forecast by the market.
The data release yesterday will be followed today by Australian Bureau of Statistics data on private business investment for the December quarter and expectations for the rest of 2018-19 ahead of the December quarter national accounts next week.
And the big 2.8% slide in the September quarter was revised to a very steep fall of 3.6% by the Australian Bureau of Statistics. Total construction fell 2.6% over 2018.
The biggest quarterly fall was a 5.0% decline in engineering work, while total construction work was down by 2.6% from the same time last year.
Building work slipped by 1.7% to $29.6 billion during the quarter, reflecting a 3.6% fall in residential construction (the biggest quarterly fall in 8 years). This was only partially offset by a 1.9% increase in the value of non-residential.
Of note, the value of private residential work slumped by 3.7%, an outcome that will drag on the fourth quarter growth figures out next Wednesday.
From a year earlier, residential and non-residential work undertaken grew by 2.1% and 0.4% respectively.
Along with residential, the value of engineering work dragged on the quarterly headline reading, slumping 5% to $21.493 billion, leaving it down 7.8% from a year earlier.
The weakness in engineering during the quarter was driven by public investment which slumped by a surprisingly large 10.3%.
ANZ economist, Felicity Emmett has commented on the latest construction data:
“The construction sector has been a key support for the economy over the last few years, both in terms of growth and employment. While there is still a considerable amount of work in the pipeline for public engineering construction and residential construction, the weakness in second half of 2018 has been more marked than we expected, and if this points to an earlier and sharper turn in the cycle than we expected, it would suggest downside risks to our outlook.”