Andrew Hanlan, Research Analyst at Westpac, notes that the Australian construction work fell by 2.8% in Q3, which was a surprise result and a likely temporary dip.
Key Quotes
“Total construction activity fell by 2.8% in Q3, well below expectations (market median +0.9% and Westpac +0.6%).”
“Construction work can be volatile quarter to quarter, impacted by weather disruptions and reflecting the lumpy nature of some sizeable projects.”
“This drop in construction work will dent overall economic growth for the September quarter. Currently, we expect GDP growth of 0.7%qtr, 3.4%yr for Q3. The risks now appear to be tilted to the downside. That said, we are mindful that labour market conditions suggest the economy continued to expand at a healthy clip in the period. Jobs growth, dominated by full-time employment, was a robust 0.7% in Q3.”
“Going forward, public infrastructure investment is set to continue growing strongly, as governments commit to new projects, thereby replenishing the investment pipeline. This is likely to underpin a lift in overall construction activity – albeit at a more modest growth pace than recently given the turning down of the home building cycle.”
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