Value of residential construction falls 2% in March quarter: ABS
Residential construction remains in the doldrums, with the value of residential building work completed falling 2% in the March quarter to just under $11 billion, according to the latest quarterly ABS construction figures.
New residential building work fell 1.3% to $9.6 billion on a seasonally adjusted basis, the fourth consecutive quarterly fall following a smaller 0.3% fall in the December quarter.
The value of renovations fell 5.3% to $1.8 billion over the quarter.
The value of residential building is down 8.3% on the March 2011 quarter on a seasonally adjusted basis.
HIA senior economist, Andrew Harvey, says the result for new dwelling construction and renovations is a concern "as it suggests not only that dwelling investment will again detract from GDP growth in the March 2012 quarter, but also that the renovations side of the residential building industry is now also facing headwinds”.
"Renovations have been the positive news story for the residential building industry with the value of total work holding up relatively well, but there are now mounting signs that this side of the industry is slowing.
“Today’s data is just another piece of evidence that current policy settings need to be amended. The official GDP growth forecasts remain too optimistic, interest rates need to be cut again next week and governments need to quickly support the domestic non-resources industry, including residential building and manufacturing so that the nation is well-placed to grow in the longer-term,” he says.
Non-residential construction work fell 9.2% in the quarter to $7.46 billion and is down 6.8% year-on-year.
Combined, the seasonally adjusted estimate of total building work done fell 5% to $18.45 billion in the March quarter.
The total value of building work has fallen 7.7% since the 2011 March quarter.
On the back of the big resource projects, engineering work rose 13.3% for the quarter to $29.84 billion and is up 35.6% year-on-year.
Commenting on the quarterly data, Westpac says housing construction activity weakened, "with the sector facing a number of headwinds" though lower interest rates will provide support to the sector over coming quarters.
An indication of the impact of large resource projects, construction work jumped 38.8% in WA, but declined in all other states.
Westpac says the construction sector is likely to add around 0.6 percentage points to first quarter GDP growth, a little above the 0.4 percentage points it anticipated.
