Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Economists remain confident of a solid economic growth figure when the national accounts are released next week, despite disappointing construction numbers for the September quarter.
Construction work completed in the quarter fell 2.6 per cent to $51.2 billion, when economists had expected a slightly smaller 1.9 per cent decline.
Building work, both residential and commercial, declined in the quarter, as did engineering projects, the Australian Bureau of Statistics data released on Wednesday show.
Housing Industry Association economist Angela Lillicrap said the data precedes the positive impact of the HomeBuilder program due to the lag between purchasing a house and commencing construction.
“It does reflect the impact of the restrictions on activity including the Victorian shutdown period,” Ms Lillicrap said.
Construction work in Victoria fell by 5.7 per cent to $14 billion during the period – by far the weakest mainland state during the quarter, and reflecting the harsh COVID-19 lockdown during the period.
But there are positive signs ahead, with Commonwealth Securities senior economist Ryan Felsman pointing out that the Ai Group’s monthly construction index is pointing to a residential building recovery.
“The construction gauge hit a two-year high in October and that was even before Victoria fully emerged from its lockdown,” he said.
Across the country, building construction fell two per cent, with residential work easing one per cent and non-residential declining 3.4 per cent.
Engineering work also fell 3.3 per cent.
The data feeds into next Wednesday’s September quarter national accounts.
At this stage economists are forecasting economic growth of two to four per cent in the quarter.
The economy sank into recession for the first time in almost 30 years in the first half of 2020, contracting by seven per cent in the June quarter after a more modest 0.3 per cent fall in the March quarter.
Australia has not suffered three consecutive quarters of contraction since the early 1980s recession, when it endured four.
Economists draw their optimism from the rebound in employment and the surge in retail spending, the latter jumping 6.5 per cent in the September quarter after dropping 3.5 per cent in the previous three months.
They will finalise their forecasts after Thursday’s business investment figures, and quarterly reports for company profits and inventories, international trade and government spending early next week.
But Reserve Bank deputy governor Guy Debelle told a conference on Tuesday the outlook for the economy remains uncertain.
Reflecting on the global financial crisis 12 years ago, Dr Debelle also warned against removing stimulus too early.
“A number of European countries learned this lesson to their cost after the global financial crisis,” he said.
A new survey found nearly one in three small firms believe the end of the JobKeeper wage subsidy program in March will have a major impact on their business.
The November Sensis Business Index found the impact will be felt greater in metropolitan areas (35 per cent) compared with just 14 per cent in regional Australia.