It’s going to be tough fitting the six-year low in construction into the government’s jobs-and-growth story.
Allowing for regular seasonal variations as well as for price changes, construction work done in the September was down 4.9 per cent from the June quarter and by 11.1 per cent from a year earlier.
It’s well known that engineering construction – roads, mines, bridges, railways and the like – is heading lower in the line with the ongoing slump in mining investment.
That category of construction dropped 3.8 per cent in the quarter and by 23.2 per cent through the year to be less than half the peak reached just three years earlier.
But non-residential building – shops, hotels, offices, schools and so on – fell 10.9 per cent in the quarter, the steepest one-quarter fall for 16 years. Home-building was down by 3.1 per cent.
The good news is that the worst is probably behind us for the mining wind-down. The level of non-residential building approvals is trending up and home-building, while flattening out, is doing so at a very high level with no real sign of a downturn.
So hopes of a gradual pickup in economic growth and the employment that it drives – a scenario repeatedly outlined by the Reserve Bank in recent weeks – are probably not misplaced.
The Australian dollar’s post-Trump slide should even add a little confidence to that medium-term outlook.
But for the time being, a mid-year slowdown in economic growth appears likely to be confirmed by the September quarter national accounts on December 7.
Not only will construction, which amounts to about one seventh of the economy, be a drag on growth, but export and import figures already available suggest the contribution to growth from foreign trade will also be a sizeable negative.
That would be consistent with the government’s estimate of job vacancies advertised on the internet.
The figures for October, updated on Wednesday, showed a 1.9 per cent rise in vacancies in the month, but only to a level 2.2 per cent up from a year before and below levels recorded from November last year right through to August this year.
And the Department of Employment calculates the current trend to be downward, to the tune of 0.4 per cent a month.
The Australian Bureau of Statistics’ estimate of employment growth, published last week, also turned marginally negative in October.
In view of the latest signs of economic weakness, and the usual delay between fluctuations in economic growth and changes in demand for workers, the chances are we will face more grim-looking labour market outcomes through much of the summer.