Construction misses in Q4: Pete Wargent

That follows on from a significant contraction in Q3, so in the second half of 2018 construction work done slowed by about 7 per cent overall.

 

Quite nasty on the face of it, although we were coming off a high base. 

 

The engineering construction work done figures took a 5 per cent hit in Q4, which sounds quite dire at first blush.

 

To be fair, the ABS has never gone big on accruals accounting for one-offs like the LNG Prelude platform, and as the Gorgon and Ichthys projects drop off the headline figures will inevitably appear weak - yet the underlying figures aren't quite so bad.

 

In fact mineral exploration spend has been on the rise, so investment and mine restarts will likely pick up, especially in Western Australia. 

 

Here are the trend figures for engineering, in chain volume measures terms (you can click to expand the charts).

 

Residential construction work dropped by about 3½ per cent in the fourth quarter, although overall activity was actually still quite high on these estimates. 

 

A significant driver of the squeeze was slowing Sydney and Brisbane apartment construction, and there'll be plenty more to come here in 2019. 

 

For completeness, quarterly 'other residential' work done slowed by about 4½ per cent in H2 2018 from $8.2 billion to $7.8 billion.

 

In my humble opinion there could well be another couple of billion of quarterly declines to come here in 2019 and beyond, even if Australia is moving more towards attached dwellings and medium-density living. 

 

 

Overall, a fairly ordinary miss on expectations. 

 

There are still too many partials to be reported for Q4 2018 to have any level of certainty, but while a technical recession perhaps remains unlikely, in per capita terms it looks very possible.

 

Banks on strike; no chance of a hike.