Finance Property Construction downturn tipped to dent GDP

Construction downturn tipped to dent GDP

jobless rate august 2021
The Australian Bureau of Statistics says unemployment has eased to 4.5 per cent from 4.6 per cent. Photo: Getty
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Construction activity fell further again in the June quarter, with the value of work across Australia’s residential and non-residential sectors plummeting by a worse-than-expected $1.3 billion.

Total building work on homes dropped by a seasonally adjusted 5.1 per cent, or $699 million, on the previous three months, while work on non-residential buildings fell by 6.6 per per cent, or $630 million.

Wednesday’s figures from the Australian Bureau of Statistics showed the total value of work done plunged 3.8 per cent to $48.78 billion for the quarter – down 11.1 per cent on a year ago – and well below economists’ expectations of a 1.0 per cent quarterly decline.

It follows a decline of 1.2 per cent in June alone, which prompted an economist to warn that up to 100,000 construction jobs might be at risk if the gloom continued.

Engineering work was the only sector to improve on the previous quarter. It was down by 1.1 per cent in June – compared with 5.0 per cent in March.

Westpac economist Andrew Hanlan said the data would surely put a dent in the nation’s second-quarter GDP figures when they were released next week, adding the housing downturn still had further to go.

“[It] will weigh on conditions throughout 2019 and into 2020,” Mr Hanlan said.

The Aussie dollar tumbled from 67.76 US cents to 67.43 US cents on Wednesday in the 25 minutes following the release of the data. It was worth 67.46 US cents by 12.30pm (AEST).

It was the fourth straight quarter of declines and the worst quarterly seasonally adjusted fall since the December quarter of 2017.

Total construction work had eased to a 1.9 per cent decline in the March quarter following a 3.1 per cent drop in December and a 2.8 per cent fall in September.

Mr Hanlan said the June quarter result reflected a continued downturn in the home building cycle, as well as a pull-back in public works and a further winding down of private infrastructure activity.