Search ForexCrunch

Australian construction work increased by a small 0.2% in the March quarter as the headline result fell short of expectations (market median 1.3% and Westpac 0.7%), notes Andrew Hanlan, Research Analyst at Westpac.

Key Quotes

“Positives in the detail – around a strong rise in residential renovation work – suggest the overall result is broadly in line with our priors. Note that the Construction survey under weights renovation activity relative to the national accounts.”

“Detail

Most of the detail was consistent with current key trends.

  • Public construction is a growth driver, up a further 2.7% in the quarter (in line with our forecast of +3%), led by infrastructure with a focus on transport projects. There is considerable further upside to public investment.
  • Private engineering work was broadly stable, +0.4%, reflecting a greatly diminished drag from the mining investment wind-down, as well as a lift in non-mining activity.
  • New home building activity consolidated in Q1, -0.1%, after declining through 2017. This is consistent with our expectation of a near-term consolidation given the recent resilience in approvals.
  • Home renovation activity rebounded, with a bounce of 5% exceeding our expectations for a rise of 2.5%. This continues the volatility around a generally subdued trend.
  • Private non-residential building activity surprised to the downside, dipping by 4.2%. This follows gains in 2017 and is at odds with the strength in approvals, suggesting that this decline will be quickly reversed.”