Construction work falls in June quarter: ABS
Construction work value fell for a third straight quarter in June as strengthening residential work failed to offset slumping engineering work.
Westpac economist Andrew Hanlan noted construction activity, which represents around 16% of the economy, softened in the June quarter, as he expected.
Construction work declined by 1.2% in the quarter, and over the past year, work declined by 0.6%.
"The construction sector is feeling the impacts of cross currents," he said.
"Private building work is trending higher, boosted by record low interest rates, while private infrastructure activity is retreating from record highs as the mining investment boom deflates.
"Public works are in a soft spot ahead of a ramp-up on major transport projects."
Private infrastructure work declined modestly in the quarter, down 2.1%, with larger falls in prospects.
Private new residential building work advanced by a further 3.2% in the quarter, to be 11.7% higher than a year earlier and up 20% from the low of mid-2012.
Private non-residential building activity increased by 2.8% in the quarter and expanded by 6.6% over the year to be 20% above the low of early 2011. The work pipeline is now 9% above the peak of mid-2008.
Renovation work of private residential buildings provided a surprise, recording a 2.2% fall in the quarter, reversing a 2.0% rise in Q1, Westpac noted.
Across the nation, construction work in the June quarter declined in NSW, Victoria, WA and Qld, while a partial rebound in Tasmania continued and SA stabilised following recent sharp falls.
In NSW, construction declined by 1.2% in the quarter, to be 1.2% lower than a year earlier. An upturn in building work is broadly offsetting a downturn in infrastructure construction.
Work in Victoria was little changed in the quarter, down 0.3% in the quarter. However, over the past year, work is up 3.2%, centred on a near 6% rise in building work.
WA recorded a modest fall in work in the quarter, -1.1%, and over the year, -1.4%. Total infrastructure work is now down 13% from the peak of early 2012.
In Queensland, work edged 1.2% higher over the year, despite a 1.8% fall in Q2. Infrastructure work over the year was little changed, down 0.8%.
South Australia is the only state to experience a pronounced fall in work over the year, down almost 8%, from record highs.
Tasmania's construction sector turned the corner over the past year, with work recovering by 9.3%, led by infrastructure activity.
Construction fell 1.2% to $51.9 billion from the March quarter in ABS figures showed.
The decline was greater than the 0.4% fall in March, but less than the December quarter’s 2% fall.
Building work grew 1.5% overall, boosted by a 2.2% rise in residential construction, but this was insufficient to compensate for a 3.1% quarterly decline in engineering work.
Engineering, the largest single component of construction, fell in value to $27.9 billion from $30.7 billion. In a reflection of the reduction of resources-based investment taking place, the sector’s value has fallen almost 9% from its September quarter level of $32.6 billion.
