Australian Q1 construction work down 2.6 percent: Westpac's Andrew Hanlan

GUEST OBSERVER

Construction work is trending lower from historic highs, led lower by the mining investment downturn.

With the sector accounting for 14 percent of the economy this is a material headwind.

Total construction work fell by 2.6 percent in Q1, broadly as we expected (Westpac f/c -2.2 percent and market median -1.5 percent).

Over the past year, construction activity is down by 6.7 percent.

In dollar terms, work fell by $1.3bn in the quarter, of which $1.2bn was due to a drop in private infrastructure activity. 

The detail was also broadly as anticipated.

Private infrastructure work fell sharply, albeit not as rapidly as in Q4, as work on major mining projects nears completions.

Public infrastructure advanced for a 3rd consecutive quarter as work on key transport projects gets underway.

The new home building boom continues, although the rate of growth is moderating.

The private commercial building cycle has turned, consistent with the 20% drop in approvals over the past couple of years.

Details

Total construction                –2.6 percent
Private construction            –3.7 percent
Public construction             +2.5 percent

Private - by segment

Infrastructure                        –6.8 percent
Dwelling, new                      +1.5 percent
Dwelling renovations          +0.9 percent
Non-res. building                 –7.6 percent

Public - by segment

Infrastructure                        +2.2 percent
Building                                 +3.5 percent

Andrew Hanlan is senior economist for Westpac and can be contacted here.