The value of construction work done in Australia in the fourth quarter rose by 0.8 per cent in the December quarter, according to figures from the Australian Bureau of Statistics (ABS).

In seasonally adjusted terms, the value of work done rose to $41.92 billion. Forecasts centred on a rise of 1.1 per cent on the quarter, a Reuters poll showed.

Construction work for the third quarter was revised to show a fall of 1.5 per cent, compared to a prior reading of a fall of 2.1 per cent.

Master Builders Australia, the peak body for the building and construction industry said the new building and construction data mask a growing divide between building and mining-related engineering construction.

Master Builders Australia chief economist Peter Jones said, “The latest figures show a struggling non-residential building sector, confirming evidence from recent Master Builders’ surveys suggesting that builders’ face difficulties compensating for the effects of the winding down of stimulus spending programs.”

“Both residential and non-residential building remain below par, although the pipeline of work to be done in the residential sector is more promising than in the non-residential sector, where work yet to be done and work approved but not commenced fell again in the December quarter to be down by nearly one quarter on a year ago.”

According to Mr Jones, residential building, after promising so much, runs the risk of remaining weak as Reserve Bank rate rises and finance constraints continue to act as a handbrake on the upturn.

“A big rise in engineering construction activity in the quarter may simply be a precursor to a further acceleration as the construction sector benefits from the huge pipeline of resources-related work yet to be done,” he said.

“For the building and construction industry overall, a sectoral divide is opening up, with strong engineering construction fed by the mining boom contrasting with weak building activity.”

“In contrast to the positive outlook for engineering construction, the residential building upswing faces challenges and non-residential building needs to find private sector growth drivers to replace government programs.”

With Reuters