Construction work dropped in the three months to March, which could have an impact on economic growth.

The value of construction work done fell 0.7 per cent in the March quarter to $46.4 billion, a slightly sharper fall than expected, and was down 7.2 per cent in the year to March.

The biggest drag was housing construction, down 4.7 per cent in the quarter, as developers put the brakes on residential projects, likely due to concerns of oversupply.

“Overall, construction fell further to the lowest level since 2011,” UBS economist George Tharenou said.

“While the fall was largely as expected, the sharp retracement of housing was a negative surprise.”

National Australia Bank Tapas Strickland said that could have an impact on March quarter economic growth.
“The topping out of apartment construction is an important element of the outlook for growth and interest rates as it has been a key driver of employment growth in the economy to date,” he said.

“Along with soft partial data to date, there is a real risk that Q1 GDP could print a flat or even a small negative outcome.”

There was a stronger-than-expected rise of 2.2 per cent in engineering construction in the March quarter, the first increase for seven quarters.

Economists said this possibly indicates some large public works projects in the eastern states are starting to offset the completion of mining projects.


By Prashant Mehra
  • Let's be honest. The construction sector in Australia has accounted for more than one in five new jobs created (net) throughout Australia over the past three years and around half of all new jobs created over the last twelve months (ABS data to February 2017) and the industry has largely been the 'spare type' for the economy during that time.

    With expectations that building activity will drop back, there are few signs of any other sectors which are ready to pick up the slack. Unless new growth engines can be found, Australia is in for slower growth over the next few years. Not being a trained economist who has done any form of economic modelling, of course I can't call a recession. And yes, there still will be some growth sectors (think of the 80,000 odd disability workers Australia needs over the next three years for the NDIS) But one would imagine there are slower times ahead.