Australia | May 27 2009
By Chris Shaw
Economists pretty well had it right as Australian construction work done in the March quarter fell by 3.7%, broadly in line with a consensus estimate of a decline of 4.0% for the period.
The numbers show a distinct split between public and private work levels, the former rising in the period by 4.4% on the back of a 14% gain in non-residential construction, while the latter recorded a decline of 6.2%. One area of surprise was in the level of work completed, Commonwealth Bank economist James McIntyre noting this measure came in slightly higher than had been forecast.
Given the data matched expectations, economists have had little reason to adjust GDP forecasts, ANZ economist Dr Alex Joiner continuing to forecast a modest contraction in growth for the March quarter. Westpac senior economist Andrew Hanlan’s estimate is similar, the bank expecting today’s figure will take 0.7% from GDP in the period, which it expects will fall by 0.2% in the quarter and by 0.4% in year-on-year terms.
In terms of any recovery, Hanlan suggests later in the year construction work is likely to recover given there are already some signs of an upturn in residential construction activity, thanks in large part to low interest rates and the boost provided by the first home buyer grants.
There has been little impact on currency markets from the construction data today, Westpac noting the currency has barely moved against the US dollar. In terms of short-term direction Westpac suggests the Aussie dollar may well test the US79.00-79.30c level but here there are some important technical resistance levels, meaning there is no change to its recommendation to fade the currency’s current strength.