Construction Work Done — Q1 | By the numbers
- The total value of construction work done fell by 1.9% in Q1 to $50.788bn, with the market forecasting a flat (0.0%) outcome. Q4's initially reported fall of 3.1% was revised down to -2.1%.
- Across the categories in Q1;
- residential work fell by -2.5% to $18.732bn (-3.2%Y/Y)
- non-residential work lifted by 3.6% to $11.103bn (+3.1%Y/Y)
- engineering work declined by -3.9% to $20.953bn (-12.4%Y/Y)
Construction Work Done — Q1 | The details
The 1.9% slide in activity in Q1 reflected weakness in residential construction and in infrastructure work in both the public and private sectors. Construction work in the private sector fell by 1.3% over the quarter to $39.308bn (-4.8%Y/Y), while public sector activity declined by 3.7% in Q1 to $11.48bn (-10.0%Y/Y).
Starting with the private sector, building work (including residential and non-residential construction) lifted by 0.5% in Q1 to $26.683bn (-1.4%Y/Y). Within this, residential work contracted by 2.4% to $18.524bn in Q1, as annual growth turned negative (-2.9% from +3.8%). This was driven by weakness from 'new' construction (-2.2%q/q, -2.9%Y/Y) and from alterations (-3.6%q/q, -3.0%Y/Y).
In better news, non-residential construction (offices, warehouses etc) picked-up by 7.8% in the quarter to $8.159bn to be +2.4% through the year. This appears consistent with the improving capital expenditure data and rising investment intentions from businesses.
Private sector engineering work declined by 5.0% in Q1 to $12.625bn (-11.2%Y/Y) around a softening trend over recent quarters.
Turning to the public sector, engineering work declined by 2.2% to $8.328bn for the quarter. Surprisingly, activity has contracted for 3 consecutive quarters now, with the annual pace decelerated to -14.1% from -6.1%. Overall, though, the strong pipeline of public infrastructure projects is likely to see this period of softness pass. Public sector building work fell by 7.4% in Q1 to $3.152 that mostly reversed last quarter's gain but is still positive in through-the-year terms (+2.8%Y/Y).
The state-based detail is provided in the table, below, inclusive of both private and public sector activity. The slowing in residential work has been broad-based across the states since the second half of 2018 and has further to run. Non-residential work is being supported mostly by rising investment in the two largest states of New South Wales and Victoria, with strength also in Tasmania, but the other states have been weak. Engineering work showed broad-based weakness, with Western Australia impacted by the completion of major resources projects.
Construction Work Done — Q1 | Insights
Today's report showed that the weakening in residential construction continued in Q1 and can be expected to remain that way throughout 2019 weighing on national economic growth. Though public infrastructure work has slowed recently, it is still likely to be a key support going forward. Non-residential work has picked-up and investment intentions from the capital expenditure survey are on the rise — including in the mining sector, which may now firm given the strength in commodities prices.