Construction increases in September
STRONGER than expected construction activity has raised the prospect that the economy continued to record robust growth in the September quarter, economists say.
Total construction work done in Australia rose by 4.4 per cent in the September quarter in volume terms, seasonally adjusted, well above the median market forecast of a 1.5 per cent rise.
The increase was underpinned by a sharp rise in engineering activity, which rose a seasonally adjusted 10.4 per cent in the September quarter, in volume terms.
CommSec equities economist Savanth Sebastian said it was a very positive, “buoyant” set of numbers.
Mr Sebastian recent global downturn had caused a downgrading of Australia’s growth prospects, but the construction data was “a positive sign in the right direction”.
“There has been a bit of factoring in of a weaker growth number overall,” Mr Sebastian said.
“This will certainly lead to a more positive view,” he added.
Mr Sebastian said the longer term outlook for residential and building construction was encouraging given the significant interest rate cuts from the Reserve Bank of Australia (RBA).
But he said engineering construction and infrastructure would continue to lead the way, given the demands of the Chinese economy.
“The structural change in China is something that is going to require further growth in the resources sector,” Mr Sebastian said.
“As a result of that, you’ve seen that engineering and infrastructure is really where the growth is at – and is likely to be – in the coming years.”
The ABS releases Australia’s September quarter national accounts on Wednesday, December 3.
Before that, private capital expenditure figures for the September quarter are due tomorrow Thursday, while business inventories and company operating profits for the same period will be released on Monday.
The Australian dollar was little changed. The local currency was trading at $US0.6461 just before the data was released at 11.30am (AEDT), and edged slightly higher to $US0.6467 shortly afterward.