The value of construction work done in Australia plunged again in the September quarter, according to figures released by the Australian Bureau of Statistics (ABS) on Wednesday.
And it wasn’t just because of the unwinding mining capital expenditure boom. It was everything, including residential construction.
According to the ABS, the value of work done dropped by 4.9% to $46.15 billion in seasonally adjusted terms, well below the median economist forecast that was centred on a decline of 1.7%.
In dollar terms, it was the smallest quarterly total since late 2010.
In percentage terms, the value of construction work done was down 11.1% on the levels of a year earlier.
By component, the value of building work fell by 5.7% to $25.9 billion, trimming its gain from the same quarter last year to 1.4%.
At $1.57 billion, the quarterly decline was the largest since the September quarter 2000, following the Sydney Olympics.
Somewhat surprisingly, the value of residential building work fell by 3.1% to $17.6 billion. However, putting the decline in perspective, it was still up 6.3% on a year earlier.
Non-residential work was the major disappointment, plunging 10.9% during the quarter to $8.3 billion. That left it down 7.6% from the levels of Q3 2015.
Reflective of the unwinding mining sector infrastructure boom, the value of engineering construction fell by 3.8% to $20.3 billion, leaving it down a mammoth 23.2% on the same quarter in 2015.
The quarterly value of engineering construction work done was the smallest seen since the first quarter of 2010.
It has now fallen for 12 consecutive quarters.
By sector, the value of private engineering work fell to $12.8 billion, the lowest quarterly total in six years. Partially offsetting that fall, the value of public sector work rose to $7.4 billion, the largest quarterly total in three years.
Public sector engineering work has now increased in each of the past five quarters. However, at least for the moment, it’s unable to completely offset the decline in private work that’s largely due to large-scale mining projects being at or nearing completion.
While the markets have not reacted to the weak report, the drop in the value of work done is a disappointing result ahead of Australia’s Q3 GDP report that will be released in early December.
“All of this pretty much feeds into different GDP slots as it includes the initial estimates of dwelling investment, public sector building, non-residential building and resource dominated engineering construction,” said David de Garis, senior economist at the NAB, before the report was released.
On that front, and accompanying a surprise drop in retail sales volumes over the same period, it suggests that Australian economic growth may disappoint in the September quarter, at least on early indications.
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