Construction Lifts 9% in June While Building Approvals Fall: ABS


The amount of construction work done rose 9.3 per cent in the June quarter well ahead of economists' expectations of a 1.0 per cent increase.

Engineering construction leapt 21.5 per cent in the June quarter – the largest quarterly rise on record – though the data was likely inflated by the completion of the latest stage of Chevron’s Gorgon LNG project in Western Australia.

JP Morgan economist Tom Kennedy told the Financial Review that the implications for next week’s second quarter GDP inputs will be smaller than expected:"The surge in engineering work likely owes to the completion of a large LNG structure. This is a meaningful upside surprise, but we suspect the implications for next week's 2Q GDP print will be smaller than the headline numbers would otherwise suggest." Kennedy said.

Total building work done on homes and non-residential buildings such as offices and shops rose 0.1 per cent in the quarter.
Building Approvals, July 2017

In a separate release, the number of dwellings approved fell 1.7% in July following a 11.7 per cent (revised from 10.9 per cent) rise in June.

The slowdown comes after the Reserve Bank cautioned construction activity could decline amid rising levels of housing debt.

The fall in building approvals was led by weakness in the apartment sector, with apartment approvals down 6.7 per cent, almost 30 per cent this year.

Despite the decline in apartment approvals, non-residential and housing approvals remained strong – supporting estimates that the downturn will perhaps be more modest than some forecasters currently predict.

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