Australian construction fell a seasonally adjusted 0.3% in the months to 30 June, contributing to the largest year-on-year fall since 2009.
Today’s ABS data reveals that $50.8 billion worth of construction work took place across the country, down 0.9% from June 2012.
All sub-sectors besides home renovations were weak, particularly so commercial building, which fell 1.3% over the quarter and 3.4% over the year.
Analysts generally expected construction to improve by 1.6% in the quarter.
Arab Bank Australia treasury dealer David Scutt said today’s construction data reflected the longest losing streak since 1989-91.
— David Scutt (@Scutty) August 28, 2013
The result missed even UBS’ flat quarter-on-quarter forecast but UBS economists Scott Haslem and George Tharenou said the data did not change their Q2 GDP forecast of +0.7%.
Here’s what they said:
While construction activity remained on a weakening trend (down 1% y/y) with a further 0.3% q/q fall in Q2, it was still only a little bit worse than our flat q/q forecast.
While national accounts re-weighting suggests that non-residential construction fell by around ½% q/q, this is largely offset by residential activity
bouncing by around 1.7% q/q, given a rebound in alterations & additions after an unusual drop (albeit public fell).
With equipment likely to rise in tomorrow’s capex release, it seems unlikely business investment is going to drag on growth to the extent it did in Q1, consistent with our view capex is ‘flattening, rather than collapsing in 2013’. Hence, we keep our Q2 GDP forecast at +0.7% q/q.