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Wednesday, 6 June 2018

Requiem for a construction bubble

Construction sector now contracting

Private new house sales fell sharply in April 2018, as this phase of the construction cycle draws to a close.

Source: HIA

The Australian National Accounts recorded surprisingly strong real GDP growth, at 3.1 per cent over the year to March 2018.

However, the ABS reported the construction sector contracting by 0.7 per cent, with new building contracting by 0.6 per cent and construction services declining by 1.7 per cent.

This was consistent with slower dwelling approvals and commencements, according to the ABS.

And this was in spite of an increase in civil engineering construction.

Which leads us nicely into our latest monthly report.

Total construction employment recently exploded to 1.2 million through this cycle, and is now at its most bloated level in a century.

About three-quarters of construction employment is accounted for by the residential sector.

Of course, this cannot last as residential construction now slows.

Sophisticated investors and fund managers can grab a free copy of our monthly report at LiveWire Markets here.