Construction work down as surging residential fails to offset falling mining
Construction work done has fallen for the third straight quarter as the resources building boom winds down.
The Bureau of Statistics measure has now fallen for three straight quarters, declining 1.2 per cent in the June quarter compared to the first three months of the year.
Construction work has now fallen 0.6 per cent since the same time a year ago.
The fall was entirely driven by a 3.1 per cent slide in engineering to $29.7 billion, mostly related to the resources sector, which is now down 5.6 per cent on last year.
By way of contrast, residential construction rose 2.2 per cent in the quarter, and has jumped 9.6 per cent on levels seen at this point last year, to $13.4 billion.
Commercial construction has also held up reasonably well, rising 0.5 per cent in the quarter and 2.9 per cent over the past year, but is the smallest of the three sectors worth $8.8 billion over the June quarter.
The shift away from mining engineering can also be seen in which states have had increasing work done, and those where the construction sector is in decline.
New South Wales, Victoria and Tasmania have had three straight increases in construction work done, while Western Australia, South Australia and the Northern Territory have had three consecutive quarters of decline, and Queensland two.
The ACT had a rise in building in the June quarter following two years of falls.
However, Citi's economists Joshua Williamson and Paul Brennan say that reduced resources investment is not the sole contributor to the decline in engineering.
"The decline was the sixth in seven quarters, which roughly corresponds to when mining started dragging on investment," they observed in a note on the data.
"However, public sector engineering has fallen in five of the last six quarters, exerting its own drag on total engineering investment."
Commonwealth Bank economist Gareth Aird says the good news for policymakers is that improving residential activity is taking up much of the slack from reduced resources investment.
"The lift in dwelling investment is having the duel benefit of absorbing job losses associated with the downturn in mining investment while adding to the stock of housing," he wrote in a note on the figures.
"The latter will help to slow the pace of house price appreciation."
