Australian construction activity data are due to be published this morning (11:30am AEDT). Capacity constraints and weather-related disruptions have held the construction sector back from working through large pipelines in the residential and public sectors. Some easing of these headwinds saw construction work pick up in the September quarter and this is likely to have continued into year-end.
Construction activity rebounded by 2.2% in the September quarter as wet weather delays cleared and supply disruptions eased. Work done picked up across the board in the residential (1.3%), non-residential (1.1%) and engineering segments (3.4%).
Private sector construction (2.6%) saw its strongest quarterly rise in several years. New home building rebounded strongly (2.5%) from the first half of the year (-5.7%), which was hampered by adverse weather on the east coast and labour and materials shortages. Alterations (-5%) appeared to be declining as more of the renovations started under the HomeBuilder scheme had been completed. Non-residential construction had expanded by around 6% over the year after a substantial volume of activity was delayed through the pandemic.
There was a more modest 0.9% rebound in public sector work in the quarter (from -0.6%). Engineering activity accelerated (2.4%) to be nearly 11% higher over the year as work on the large pipeline of public infrastructure projects continued. However, public building work had levelled out and was up only modestly from a year earlier (1.6%).
Market expectations | Construction Work Done
The pace of construction activity is expected to moderate from Q3 (2.2%) with the median forecast for the December quarter looking for an increase of 1.5% in the quarter. The range of estimates is between -1% to 2%.
The pace of construction activity is expected to moderate from Q3 (2.2%) with the median forecast for the December quarter looking for an increase of 1.5% in the quarter. The range of estimates is between -1% to 2%.
What to watch | Construction Work Done
Can the encouraging signs in the residential sector from Q3 continue into year-end? The residential pipeline sees a record number of houses under construction, with labour and materials shortages pushing up home building costs substantially over the past couple of years. This has been a major contributor to the rise in Australian inflation. Further indications that work is picking up would suggest supply pressures are easing, which should point towards inflation in the sector cooling.
Can the encouraging signs in the residential sector from Q3 continue into year-end? The residential pipeline sees a record number of houses under construction, with labour and materials shortages pushing up home building costs substantially over the past couple of years. This has been a major contributor to the rise in Australian inflation. Further indications that work is picking up would suggest supply pressures are easing, which should point towards inflation in the sector cooling.
