Australia: Cooling construction activity in Q1 2019 - Westpac

Andrew Hanlan, analyst at Westpac, points out that Australian construction sector experienced a further cooling of conditions in early 2019, with construction work contracting for a third consecutive quarter, falling by: -3.6% in Q3 2018; -2.1% in Q4; and -1.9% in Q1 2019.

Key Quotes

“The March quarter outcome fell short of expectations, which were for a consolidation (market median flat and Westpac +0.2%).”

“With the construction sector accounting for about 14% of the economy, this result will subtract in the order of 0.25ppts from activity in the quarter (depending upon how these quarterly partials flow through to the national accounts).”

“The key surprises were: (1) the softness in public works, despite a sizeable work pipeline; and (2) a further wind down of private infrastructure activity, despite the recent lift in commencements and the growing work pipeline.”