The partial indicators for Q2 GDP continue to flow, with the ABS releasing Construction Work Done for the June quarter.
The seasonally adjusted headline fall of 1.2% over the quarter masked some big sectoral divergences. This highlights that Australia’s economic transition is occurring but at a pace which isn’t yet able to offset the big fall in mining-related engineering construction, which fell 3.1% on the quarter. Building rose 1.5% seasonally adjusted, residential was up 2.2% and non-residential was up 0.5%.
The divergent sectoral performance also showed up in the state based results. The chain volume measures – trend terms – showing that the “financial services” states of NSW and Victoria have both seen construction rise for the past three quarters while the “mining states” of Queensland and Western Australia have now fallen for two and three quarters respectively in a row.
This data is not entirely unexpected but the 1.2% fall is more than double the median market forecast for the data, so at the margin it is a negative indicator for GDP growth.
The focus now turns from the past, Q2 GDP, to the future with the release of private new capital expenditure tomorrow morning at 11.30. Business investment intentions will be watched especially closely by traders, investors and economic forecasters.
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