(Australian Associated Press)
Economists are moderating their GDP forecasts after construction data showed building work plummeted by a worse-than-expected $1.3 billion in the June quarter.
Total building work on homes dropped by a seasonally adjusted 5.1 per cent, or $699 million, on the previous three months, while work on non-residential buildings fell by 6.6 per per cent, or $630 million.
Wednesday’s figures from the Australian Bureau of Statistics showed the total value of work plunged by 3.8 per cent to a near three-year low of $48.78 billion for the quarter.
That’s down 11.1 per cent on a year ago and well below economists’ expectations of a 1.0 per cent quarterly decline.
Engineering work was the only sector to improve on the previous quarter, declining by 1.1 per cent in June compared with 5.0 per cent in March.
JP Morgan strategist Tom Kennedy said the firm had moderated its second-quarter GDP forecast in light of the “disappointing” figures, with quarterly growth expectations dropping from 0.5 per cent to 0.3 per cent
Westpac economist Andrew Hanlan agreed the data would put a dent in the national accounts to be released next week and said he expected the housing downturn still had further to go.
“(It) will weigh on conditions throughout 2019 and into 2020,” Mr Hanlan said.
The Aussie dollar tumbled from 67.76 US cents to 67.43 US cents in the 25 minutes following the release of the construction data and was worth 67.41 US cents at 1300 AEST.
It was the fourth straight quarter of overall construction declines and the worst quarterly seasonally adjusted fall since the December quarter of 2017.
Total construction work had eased to an upwardly revised 2.2 per cent decline in the March quarter following a 3.1 per cent drop in December and a 2.8 per cent fall in September.
Mr Hanlan said the June quarter result reflected a continued downturn in the home building cycle, as well as a pull-back in public works and a further winding down of private infrastructure activity.
Mr Kennedy said new dwelling construction had been hardest hit in the June quarter with a 5.3 per cent decline, though renovation activity also moved 3.3 per cent lower and has now contracted for three consecutive prints.