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Category: Business, Economics and Finance / Economic Trends / Building and Construction

Construction work falls again, dragged down by big engineering projects

Wednesday, 24 Aug 2016 11:33:42 | Stephen Letts

Total construction over the year is now down 10.6 per cent. (Giulio Saggin: ABC News)

Total construction work done in Australia has fallen for the fifth consecutive quarter, dragged down by new work failing to fill the void left by the completion of big resource projects.

On a seasonally adjusted basis, the Australian Bureau of Statistics figures shows the value of total construction fell 3.7 per cent in the June quarter to $47.4 billion, a level not seen since June 2011, when the construction sector was just beginning to recover from the GFC.

Total construction over the year is now down 10.6 per cent.

Growth in building and residential sectors failed to offset the on-going retreat in engineering construction, which captures the big LNG and mining projects.

The value of engineering work fell another 9 per cent over the quarter to be down almost 25 per cent over the year.

Residential building edged up 0.8 per cent in the quarter and 9.4 per cent for the year while the value of other building work rose 1.2 per cent for the quarter and 6.1 per cent for the year.

Queensland chalks up its tenth quarter of contraction

Construction work by sector Photo: Construction work by sector

The figures further underline the widening gap between New South Wales and Victoria and the other states in terms of construction activity.

While construction work in Victoria has risen for the past eight quarters, seven in New South Wales and three in the ACT, elsewhere it has been a story of ongoing contraction.

Construction work has now fallen in Queensland for 10 quarters, the Northern Territory hasn't seen growth in six, Western Australia and Tasmanian have been going backwards for the past year, while South Australia has been contracting over the past 6 months.

Construction data may drag down GDP: JP Morgan

The figures are the first set of the so-called "partial" quarterly data that feed into the June quarter GDP number to be released in a fortnight's time.

JP Morgan economist Ben Jarman said the result was weaker than expected.

Mr Jarman noted while the nature of mining work can make construction figures "lumpy", they do imply a "downside" risk to first quarter economic growth.

"In the remainder of the data, building work is holding up, and we expect the flow of residential building project completions to remain strong over the next couple of years, given the elevated volume of higher density work going on," Mr Jarman said.

He said the story was more nuanced for non-residential building.

"State government infrastructure project commencements are lifting, but the projects are very long-lived.

"These projects are adding to GDP today, but the lags to the work done data are uncertain," Mr Jarman said.

AustraliaPlus


 

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