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Australian construction work done falls in Q4, largest quarterly decline in over a year

Australian construction work done fell 3.0 percent q/q in Q4, the largest quarterly decline in over a year and substantially larger than expected (-1.0 percent q/q). The downturn in residential activity accelerated but it was private sector non-residential construction work done that surprised to the downside. Public sector work done provided a small offset. Construction work done is the first of the GDP partials, ANZ Research reported.

The downturn in residential construction accelerated to -4.6 percent q/q, dragged down by both new residential building (-5.1 percent q/q) and alterations and additions (-1.3 percent q/q). Residential activity is now almost 15 percent lower than the mid-2018 peak.

Residential work done in Queensland fell 13.2 percent q/q to a six-year low, while New South Wales fell 4.3 percent q/q to a four-year low. Victorian activity has held up better (only 3.3 percent off its peak), while South Australia and the ACT recorded higher activity in Q4.

Non-residential building work done has been very volatile over the past year. Q4 activity dropped 3.4 percent q/q, following an upwardly-revised 7.5 percent q/q jump in Q3. The private sector dragged down activity, falling 4.7 percent q/q, while the public sector held onto its Q3 gains.

There was no evidence of the planned rise in mining investment in these numbers – engineering construction declined by 1.3 percent q/q in Western Australia. Nationally, private engineering construction fell 3.1 percent q/q, its fourth consecutive quarterly loss.

Delays on projects, including Transurban’s West Gate Tunnel, may have played a part. Public engineering construction (+1.0 percent q/q) continued to gain though.

Construction work done fell across all states but rose a little in both territories. Tasmania (-6.6 percent q/q), South Australia (-5.4 percent q/q) and New South Wales (-4.6 percent q/q) posted the largest quarterly declines.

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