Construction activity declined for a 5th consecutive quarter: Andrew Hanlan

Construction activity declined for a 5th consecutive quarter: Andrew Hanlan
Construction activity declined for a 5th consecutive quarter: Andrew Hanlan

EXPERT OBSERVATION

The construction sector is in a cyclical downturn led by the housing sector, where conditions have swung from boom-to-bust.

Private new home building work fell by a further 3.4%, meeting our expectations, to be 11.6% below the peak of mid-2018. Renovations were broadly flat, -0.2%. The housing downturn still has further to go and will weigh on conditions into 2020.

Public works returned to adding to growth, increasing by 5.4% in the quarter. That follows a moderation over the past year (down 13.4%) reflecting a gap in the investment project pipeline. Our view has been and remains that public investment will be supportive of growth over the near-term, with governments continuing to commit to additional projects.

Private infrastructure provided a downside surprise, declining by 4.6%. The outlook is for some improvement. Commencements have picked-up somewhat (eg some iron ore projects have proceeded in response to the recent elevated prices) and the work pipeline has increased – pointing to an emerging lift in activity during the year ahead.

ANDREW HANLAN is a senior economist for Westpac

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.

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