Australian construction sector activity stalled in the March quarter as the weakest outturn from the public sector in 3½ years offset an overdue acceleration from the private sector. Adverse weather events in Queensland and New South Wales during the quarter appear to have had only minimal impacts on construction work at the national level.
In the March quarter, the volume of construction work done remained steady on the prior quarter, disappointing expectations for a 0.5% rise. Activity flatlined around offsetting movements: engineering work declined by 1%q/q - its first decline in a year - but building work lifted by 0.9%q/q, its strongest rise by a very narrow margin in two years. Construction work had advanced in each of the previous 3 quarters going into today's report, the 0.9% rise in the December quarter being the most recent gain in that run. Overall, construction activity rose at a modest 3.5% pace through the year to Q1.
The weakness in the result for engineering work (-1%q/q) was driven by the public sector (-3.4%q/q), with the private sector recording a lift (1.2%q/q). Despite falling during Q1, public sector investment in infrastructure has ramped up significantly in recent years, and a large volume of work remains in the pipeline.
It was a similar profile for building work, advancing overall by 0.9% in the quarter with the private sector driving growth (2%) as the public sector saw activity go backwards (-5.6%), posting its sharpest fall since Q3 2021. Strength in private sector building came largely from the residential segment, with the volume of work done rising to a 5-year high on the back of a 1.5% rise in Q1 (6.8%Y/Y). The sector looks to be regaining some momentum having come through significant headwinds of post-pandemic supply constraints and the RBA's tightening cycle in recent years.
Non-residential work was broadly flat in Q1 (-0.1%), with a pullback in the public sector again weighing on growth from the private sector. Private non-residential work advanced by 3% for the quarter, its strongest result since Q4 2023.
