Construction work done in Australia expanded by 3% in the June quarter, far exceeding the 1% increase expected. However, the underlying detail showed that growth was narrowly concentrated in the resources sector in the Northern Territory, underpinning a 6.1% rise in engineering activity. However, building work slowed as momentum that had built up in residential construction was relinquished.
After declining by 0.3% in the March quarter, construction activity rallied to rise strongly by 3% in the June quarter, its fastest increase since Q1 2023. This lifted year-on-year growth from 3% to 4.8%. Growth was overwhelmingly driven by a 6.1% acceleration in engineering activity, which reflected new projects in the resources sector (55%), notably in the Northern Territory. Building work came close to stalling in the quarter as growth eased to 0.2% from 0.8% in the March quarter, with year-ended growth stepping down from 2.5% to 1.6%.
Residential work had been gaining in momentum since the start of last year; however, that all but came to a pause as activity slowed to rise by just 0.1% in the June quarter. Private sector new home building did in fact stall in Q2, while alterations eased to 0.2%. The non-residential segment - the other component of building work - saw output rise modestly by 0.3% in the quarter after declining in each of the previous 3 quarters.
On the whole, private sector construction activity rose by 4.3% in the June quarter, its best outturn since the September quarter of 2022. Engineering work surged (13.5%) to offset weakness in residential (0%) and non-residential work (-2.6%). By contrast, public sector work is unwinding after ramping up coming out of the pandemic. Work done by the public sector edged 0.4% lower following a 4.7% decline in Q1. Engineering work fell 2.5% but was moderated by a 6.4% rebound in building work.
