Construction work in Q4 fell more sharply than anticipated: Westpac's Andrew Hanlan

Construction work in Q4 fell more sharply than anticipated: Westpac's Andrew Hanlan
Construction work in Q4 fell more sharply than anticipated: Westpac's Andrew Hanlan

GUEST OBSERVER

The construction sector is a source of weakness as work on major mining projects nears completion.

This was apparent in 2015, with a soft end, -3.6%qtr, to a soft year.

This is the third consecutive year of decline: -2.2%yr December 2013; -5.9%yr December 2014; and -4.3%yr December 2015.

In Q4, the upswing in home building activity provided only a partial offset to mining sector weakness, as did the emerging upswing in public infrastructure, centred on transport projects.

Construction activity will subtract around 0.4ppts off Q4 GDP, a bigger hit than we anticipated, around -0.25%.

By state, weakness in Q4 was understandably centred in the mining jurisdictions: –17.7% NT; –9.5% WA; and to a less extent Qld, –1.4%.

Work was resilient in NSW, +0.2% and advanced in Victoria, +1.1%.

Details

Total construction                –3.6%
Private construction            –4.6%
Public construction             +1.2%

Private - by segment

Infrastructure                        –13.9%
Dwelling, new                      +3.6%
Dwelling renovations          –1.0%
Non-res. building                 +4.6%

Public - by segment

Infrastructure                        +3.9%
Building                                 –6.9%

Andrew Hanlan is senior economist for Westpac and can be contacted here

Andrew Hanlan

Andrew Hanlan

Andrew has been with Westpac since 2002. After starting his career in the public sector, Andrew worked at the Commonwealth Treasury in Canberra, before enjoying a stint at Parliament House, where he worked as an adviser to the Finance Minister. His main focus is analysing the Australian macro economy.

Tags: 
Construction Sector Mining Projects

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