Construction Activity Beats Expectations

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Wednesday, November 27th, 2013
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A strong rise in building and engineering construction activity shows that mining and resources investment is still going strong.

The amount of construction work done in Australia rose 2.7 per cent in the September quarter, for an annual growth rate of 1.3 per cent, figures from the Australian Bureau of Statistics show.

Market forecasts centred on a rise of 0.5 per cent in the quarter.

Total building work done in the September quarter was up 1.5 per cent, while engineering work done rose 3.5 per cent.

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JP Morgan economist Tom Kennedy said most of the gains came in non-residential building work and engineering working, which is mainly in the mining and resources sector.

“That means building in the residential sector was essentially flat in the quarter,” he said.

“That’s quite interesting because we have seen an uptick in building approvals and the housing sector in general but at this stage it has failed to translate to a higher level of construction activity.”

Mr Kennedy said activity in the housing sector was not getting out of control and mining investment activity is still strong and still close to peaking.

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“It was meant to peak in the second half of this year, it could be peaking as we speak and we won’t know if it peaked until subsequent data prints,” he said.

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