No real joy for the becalmed home building industry in the latest figures on construction work.
There was some growth in activity in the March quarter, but nowhere near enough to do anything about relieving the pressure on rising rents, house affordability and closing the gap between demand and supply for new homes.
Instead the construction work figures showed a rebound in the first three months of the year that was driven by the resources and infrastructure booms.
Not even two interest rate rises or the financial markets instability in the quarter could dampen activity in the civil engineering and heavy construction sectors.
Figures from the Australian Bureau of Statistics show that construction work completed in the quarter rose by a seasonally-adjusted 2.3%, compared with the previous quarter, to $29.97 billion.
That was a bit above market forecasts for a 2% rise.
The ABS data shows growth in total building work done in the March quarter was flat at $16.444 billion, the seasonally adjusted estimate for residential building rose 0.3% to $9,731.4 million and non-residential building fell 0.5% to $6,713.1 million.
The ABS said the seasonally adjusted estimate for engineering work done rose 5.2% to $13.528 billion.
The figures will feed into next week’s National Accounts for the March quarter for the estimates for private gross fixed capital formation on dwellings, and other buildings and structures.
The rise comes after a surprise slowdown in the December quarter’s construction work done of around 0.8%. That was revised from the original estimate of a 1.0% fall.
The improvement represents the continuing upswing in the resource sector, which is to be expected given the surging demand for coal, oil, iron ore and other metals and energy commodities.
That’s to be expected and the March quarter’s new private capital spending figures from the ABS are expected to see a further solid lift in spending, actual and anticipated.
The flat residential construction spending is a result of the sluggish home building and renovations sector, which has been hit by Reserve Bank’s campaign against rising inflation through the interest rate rises in February and March.
Meanwhile that slowing domestic economic activity has been confirmed by the latest index of leading economic indicators from Westpac and the Melbourne Institute yesterday.
The annual growth rate in the index slowed for a fourth month to 3.3% in March from 3.6% in February.
The index edged up 0.2% in March from February to be at a near five year low when compared with the trend line for growth.
Westpac’s leading index tracks eight gauges of economic activity, such as company profits and productivity, to give an indication of how the economy will perform over the next three to nine months.
Westpac’s coincident index, a measure of the current state of the economy, rose 0.2% in March. The annual growth rate of the coincident index was 3.4%.
