The first of Australia’s March quarter GDP inputs has just been released, and it’s a miss.
According to the Australian Bureau of Statistics (ABS), the value of construction work completed during the quarter fell by 2.6% to $47.929 billion in seasonally adjusted terms, missing expectations for a decline of 1.5%.
It was the third quarter in succession that the value of building work completed fell, the ninth in the past ten.
Providing some offset, the contraction of the prior quarter — previously reported as 3.6% — was revised up to a decline of 2.9%.
By component, the value of building work completed fell 1.0% to $24.919 billion, leaving the increase compared to the same quarter in 2015 at 1.0%.
In what is becoming a familiar pattern, strength in the residential sector was counteracted by weakness in non-residential work completed.
The value of residential construction completed rose by 1.5% to $16.55 billion, leaving the increase form a year earlier at 5.7%.
Overriding that increase, non-residential work completed slumped 5.5% to $8.369 billion, a decline of 7.2% on the March quarter of 2015.
Completing the trio of regularities in the report, the value of engineering work completed continued to slide, demonstrating the effects of the unwinding mining infrastructure boom.
It fell by 4.2% to $23.01 billion during the quarter, leaving the year-on-year decline at 13.7%.
The chart below reveals the trend in each sector over the past two decades.
The ABS state that the release is the major source of data used to compile the GDP estimates for private gross fixed capital formation on dwellings, and other buildings and structures.
ANZ’s economics team forecast that the contraction will lop 0.4 percentage points off Australian GDP in March quarter.
Market attention will now turn to the release of Australian Business capital expenditure for the March quarter on Thursday, including updated estimates for expected capital spending by sector for the coming financial year.
Plant, machinery and equipment expenditure, an input into GDP, is tipped to contract by 2.0% having risen 0.1% in the previous quarter.