Surge in new houses and reno’s offset by slump in non-residential construction in Qld

The ABS’s preliminary estimates of construction activity for March quarter are discouraging for Queensland, with an overall fall of 1.7% since December quarter in seasonally adjusted terms (see chart below). In contrast, construction work done increased by 2.4% nationwide. NSW was up by 3.6%, WA by 9.8%, SA by 9.0%, while Victoria fell 3.7%. In Queensland, building construction activity was basically unchanged (only up 0.1%) in March quarter as the surge in residential construction was offset by a fall in non-residential building activity (e.g. offices and shops), and the overall construction work done figure was pushed to -1.7% by a 3.7% fall in engineering/heavy construction activity (e.g. roads, bridges, etc.).*

A chart showing construction work done fell 1.7% in March quarter in Qld, while it increased by 3.6% in NSW, 9.8% in WA, and 9.0% in SA.

In Queensland, while building work on new housing construction and renovations increased by 10% in March quarter, non-residential building work was down by over 15% (see chart below, noting this is building work done only, and excludes engineering construction activity). Business leaders across Queensland have been talking up the economic benefits of a range of new projects, but we are yet to see an impact on the construction work done data.

A chart showing building work on residential housing is surging in Queensland, but that has been offset by a fall in non-residential building work (e.g. on offices and shopping centres).

The construction work done figures are important inputs into the National Accounts. The March quarter National Accounts will be released by the ABS on Wednesday next week. With total construction activity detracting from growth in March quarter, Queensland will be relying on household and government consumption spending to bring about positive growth in State Final Demand. Hopefully the recovery in interstate tourism will have helped deliver that. We’ll see next Wednesday.

*Total construction work done comprises residential building work, non-residential building work, and engineering construction work.

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