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.