Australia's March quarter construction activity data are due to be released by the ABS this morning (11:30am AEST). With capacity constraints holding the sector back over the second half of last year, further disruptions were encountered during the first quarter of 2022 from the Omicron wave and the severe wet weather events in New South Wales and Queensland.
Construction activity stalled over the second half 0f 2021 as the earlier upswing was held back by capacity constraints from lockdowns and shortages of materials and labour. In the December quarter, activity contracted by 0.4% for an overall decline of 1.6% over the second half of the year. This followed the first half acceleration (4.6%) that came in response to policy stimulus and construction subsidies.
Weakness in the December quarter was centred in the private sector (-2.4%) but was moderated by rising activity in the public sector (4.1%) through the rollout of an expansive pipeline of projects. Private sector residential construction fell by 3% in the quarter, with both new home building (-1.9%) and alterations (-8.7%) running up against capacity constraints.
Activity in the non-residential segment saw a rebound over the second half of the year (4.1%), albeit from its Covid-related trough and with activity still well down on pre-Covid levels.
In the public sector, progress in rolling out infrastructure projects that had been brought forward to support the recoveries of state economies continued to gather pace. Activity lifted by 4.1% in the December quarter.
Market expectations | Construction Work Done
Construction activity is expected to have risen modestly by 0.9% in the March quarter, though estimates range between -2% and 3.5%. This can be a volatile and lumpy series, so it is not unusual to see this degree of variation in the range of estimates.
Construction activity is expected to have risen modestly by 0.9% in the March quarter, though estimates range between -2% and 3.5%. This can be a volatile and lumpy series, so it is not unusual to see this degree of variation in the range of estimates.
What to watch | Construction Work Done
Capacity constraints in the construction sector have only intensified since the turn of the year, while there were also disruptions from the Omicron wave and severe wet weather in New South Wales and Queensland in the quarter. The key focus will be on the residential construction segment ahead of next week's GDP report.
Capacity constraints in the construction sector have only intensified since the turn of the year, while there were also disruptions from the Omicron wave and severe wet weather in New South Wales and Queensland in the quarter. The key focus will be on the residential construction segment ahead of next week's GDP report.