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.”
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