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Felicity Emmett, senior economist at ANZ, notes that the Australian construction fell 3.1% q/q in Q4, building on the downwardly revised 3.6% drop in Q3.

Key Quotes

“The weakness was concentrated in housing (-3.6% q/q) and engineering construction (-5.0% q/q), while non-residential building was up moderately (+1.9% q/q). Public sector construction (-6.0% q/q) was markedly weaker than private sector (-2.2% q/q).”

“In terms of private sector construction, housing was the weak spot. It fell a solid 3.7% q/q, as new building declined 3.6% and renovations fell a similar 4.0%.”

“The weakness in public construction was driven by a 10% drop in engineering construction. Non-residential building construction provided an offset, rising 7.3%.”

“The weakness in H2 2018 has been more marked than we expected, and if this points to an earlier and sharper turn in the cycle than we expected, it would suggest downside risks to our outlook.”