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.