Construction to lift following election: Commsec

Alistair WalshDecember 7, 2020

Construction rates should increase following the election, according to Commsec’s latest Economic Insights report.

According to data from the Australia Bureau of Statistics construction work done in the June quarter fell by 0.3%, the third consecutive decline.

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Commercial building work done fell by 1.3% with residential work down 0.1% and engineering work fell by 0.2%.

“Businesses aren’t keen to spend, invest or employ ahead of the Federal Election. So the slight fall in construction activity won’t come as a surprise,” Craig James writes in the report.

“But given some expectations that mining investment has peaked and could fall off a cliff; that certainly isn’t happening. Construction work done peaked in the September quarter of 2012 but has only eased gently from the highs."

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“On a positive note the Reserve Bank has few worries when it comes to cost pressures in the construction sector with prices growing at the slowest annual pace in three years. The slight fall in residential building will mean ‘residential investment’ will neither detract nor contribute to June quarter GDP growth."

“Overall economic growth is expected to be around 0.5%-0.8% over the quarter, which would take annual growth between 2.4%- 2.7%."

“Notwithstanding the trend to greater housing occupancy, there here are good reasons to expect a lift in construction work – especially in the residential sector – when the election is out of the way.”

Alistair Walsh

Deutsche Welle online reporter

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