Today at 11:30am (AEDT), the ABS is scheduled to publish its report on Australian construction activity for the September quarter. The nation's construction cycle was in a downturn before the onset of the pandemic, but the sector was relatively less affected by the restrictions that followed than many other services-related industries. However, in Q3 Victoria's state-wide shutdown severely restricted activity on sites so this is likely to accentuate the earlier cyclical weakness.
As it stands | Construction Work DoneAustralian construction activity was held to a modest decline of 0.7% in the June quarter to be 2.2% lower over the year. The underlying details reported a 3.8% lift in engineering work in the quarter that moderated a 3.9% fall in building work (see here).
On the latter, the downturn in private sector residential construction deepened (-5.6% in Q2) while the non-residential segment also came under pressure (-1.5%), with earlier weakness in approvals suggesting this trend will continue. Private engineering work surprised with an 8.6% rise in Q2, but this was coming off a low base associated with the wind down of completing projects in the resources sector. Public sector construction activity declined by 3.2% in the June quarter on falls in both engineering (-3.3%) and building work (-3.1%).
Market expectations | Construction Work Done
Construction activity is forecast to fall by 1.9% on the median estimate according to data compiled by Bloomberg. The range of estimates sits between -4.0% to 0.6%.
Construction activity is forecast to fall by 1.9% on the median estimate according to data compiled by Bloomberg. The range of estimates sits between -4.0% to 0.6%.
What to watch | Construction Work Done
Stimulatory policy from governments at the federal and state levels has supported the near-term outlook for detached residential work as seen in recent approvals data, though higher-density projects are being delayed or shelved due to the uncertainty around population growth dynamics due to the border closures. The pipeline of non-residential projects remains challenged by uncertainty and by the reticent of firms to commit to new investment plans. On the infrastructure side, the recent Federal Budget contained measures to encourage the states to roll-out projects on an accelerated basis.
Stimulatory policy from governments at the federal and state levels has supported the near-term outlook for detached residential work as seen in recent approvals data, though higher-density projects are being delayed or shelved due to the uncertainty around population growth dynamics due to the border closures. The pipeline of non-residential projects remains challenged by uncertainty and by the reticent of firms to commit to new investment plans. On the infrastructure side, the recent Federal Budget contained measures to encourage the states to roll-out projects on an accelerated basis.
