Australian construction work: Further confirmation of consolidation - Westpac

Andrew Hanlan, Senior Economist at Westpac, explains that Australian construction work, having trended lower in recent years, stabilised over the past half year and the drag from the mining investment downturn has diminished and public works is providing a boost.

Key Quotes

“In the March quarter 2017, construction work declined by a relatively modest 0.7%, following a 0.6% gain in the final quarter of 2016 (revised up from -0.2%). By comparison, over the year to September 2016, construction work declined by 10.7%, to be $5.6bn below a year earlier.”

“The March quarter 2017 result broadly met expectations, (market median -0.5% and Westpac -0.2%).”

“Home building activity is likely to rebound in the June quarter. Beyond that, there is a looming downturn in home building activity. Notably, private new dwelling approvals in Q1 2017 were 12% below the level of a year earlier.”

“The drag from the mining investment downturn has clearly diminished. Private infrastructure activity surprisingly rose in the March quarter, up 1.8%. We still expect some further modest downside over coming quarters.”