Construction Activity Softens In March Quarter

By Glenn Dyer | More Articles by Glenn Dyer

Now, this isn’t what the Reserve Bank wanted to read about – the value of construction work in Australia falling for the third quarter in a row in the three months to March.

A bigger than expected fall in the value, thanks to the downturn in home building (which was expected) but the surprise fall in government spending on infrastructure and other construction activity.

The value of total construction work for the March quarter was $50.8 billion, down from $51.1 billion in the three months to December and $51.2 billion in the first quarter of last year.

The reading has lowered the chances of a solid rise in GDP for the March quarter (due to be released a fortnight yesterday).

Coming on top of weak retail sales, the likelihood is that it will only be our surging terms of trade that will have kept GDP positive in the three months to the end of March.

The Australian Bureau of Statistics reported yesterday that in the March quarter the value of construction work done across the country fell a seasonally adjusted 1.9% from the December quarter.

Total building work on homes dropped 2.5% on the previous three months, while work on non-residential buildings rose 3.6%.

The biggest quarterly fall – 3.9% – was again in engineering work, while total construction work was down by 6.0% from the March quarter of 2018.
The market had tipped total activity to remain flat and Westpac warned there was more pain ahead.

“The housing downturn still has further to go and will weigh on conditions during 2019,” Westpac senior economist Andrew Hanlan said. He added that he was surprised by the drop in public works and private infrastructure given the respective works in the pipeline.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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