Construction data from the ABS for the June quarter came in well ahead of the market forecast, with residential and public infrastructure work set to support GDP growth in Q2.
Construction Work Done — Q2 | By the numbers
- Total Construction Work Done in Q2 increased by +1.6% to $A53.588bn, which exceeded market expectations for a rise of +0.8%. Revisions saw a sizeable upgrade to Q1, from +0.2% to +2.4% — mostly attributable to the residential sector.
- Annual growth in Construction Work Done was broadly flat (-0.1%)
The headline detail saw gains across all categories (including both the private and public sectors) in Q2; residential up +3.1% — after a revised +3.9% in Q1 — non-residential +1.3% and engineering +0.4%.
Breaking this down further, in the private sector; residential construction increased +3.2% q/q (+5.8%Y/Y) and non-residential (commercial projects) lifted +0.9%q/q (+5.2%). This equated to an overall gain of +2.6% in building work in Q2.
However, there was a decline in engineering (infrastructure projects) of -1.1% (-19.5%Y/Y) — volatility has been heightened in this category recently due to the import of LNG platforms.
However, there was a decline in engineering (infrastructure projects) of -1.1% (-19.5%Y/Y) — volatility has been heightened in this category recently due to the import of LNG platforms.
In the public sector, infrastructure increased by +2.6% (+18.1%Y/Y) — reflecting an ongoing upswing in Victoria and NSW. Building work was up +2%q/q (+14.5%Y/Y).
The state detail, covering both the private and public sectors, is summarised in the table, below. NSW and Victoria are leading across the board, while South Australia is also supporting.
Residential
|
Non-residential
|
Engineering
|
||||
Q/Q
|
Y/Y
|
Q/Q
|
Y/Y
|
Q/Q
|
Y/Y
|
|
NSW
|
+1.6%
|
+8.1%
|
+1.9%
|
+11.7%
|
-1.3%
|
+20.3%
|
VIC
|
+6.5%
|
+10.9%
|
+15.0%
|
+18.6%
|
-6.9%
|
+32.6%
|
QLD
|
-0.4%
|
-8.5%
|
-15.7%
|
-3.0%
|
-1.5%
|
+5.8%
|
SA
|
+11.8%
|
+16.8%
|
+9.5%
|
+25.5%
|
+10.1%
|
+31.3%
|
WA
|
-0.6%
|
-1.3%
|
+9.1%
|
-15.9%
|
-70.7%
|
-49.7%
|
TAS
|
+13.6%
|
+28.5%
|
-28.0%
|
-6.5%
|
+8.8%
|
-8.5%
|
Based on ABS 8,755.0
Construction Work Done — Q2 | Insights
This was a strong outcome from residential work, particularly when taken with the revisions to Q1. While there have been concerns raised around the outlook for residential construction due to signs of a cooling in the national housing market, the RBA anticipates the sector to support growth over the near-term due to an elevated level of work in the pipeline. Recently, dwelling approvals have shown resilience against those headwinds, with strong population growth a key factor.
Investment in public infrastructure is also set to remain supportive of growth, with major transport-related projects underway in Sydney and Melbourne to assist with accommodating the growth in population.
