The downturn in home building activity looks set to damage Australia’s third quarter economic growth.
Figures issued yesterday by the Australian Bureau of Statistics show that contrary to market expectations, total construction work done in Australia fell 2.1%, in the three months to September, seasonally adjusted.
Seeing the market forecast was for a 2.1% rise in total construction work done in the September quarter, the outcome was a complete turnaround.
It was the second negative quarter in the past four.
But the figure was up 7.1% from the same quarter in 2009.
We will get more of an indication of the influence of this figure when the new private capex figures are released later today.
Economists are looking for a rise of around 6% in the quarter after three successive quarters of declining growth.
The ABS said in commentary that total construction work done was valued at $41.372 billion in the September quarter, compared with an upwardly revised $42.245 billion in the June quarter.
The ABS said total building work done in the September quarter was $21.735 billion, seasonally adjusted, from an upwardly revised $22.336 billion in the June quarter.
Engineering work done was $19.638 billion in the September quarter, from a downwardly revised $19.908 billion.
Residential building work was the weakest sector, falling 6.1% in the quarter, but engineering work also fell 1.4%.
Non-residential building work showed a modest 1.5% from the June quarter, but that was nowhere near enough to bridge the gap.
The rise in non-residential is the residue of the Federal Government’s school building program, which is in the process of winding down.
That means it will be gone as an influence by the March quarter of 2011.
The construction figures also have a large effect on Australia’s third quarter gross domestic product (GDP) figures, due to be released next Wednesday, because building and engineering sector makes up about 16% of Australia’s economy.
Westpac’s economics team has cut 0.3 percentage points of its GDP forecast, taking it to 0.6 per cent for the quarter, which would be much weaker than last quarter’s 1.2 per cent economic growth.
The ANZ currently sees growth at just 0.1% for the quarter, meaning the economy in its view, slowed to a stumble in the September quarter.
