Apartment building contracting
A quick look at the construction figures for the June 2019 quarter revealed another significant 5 per cent drop in residential building, taking the total value of residential work done 10 per cent lower year-on-year.
Apartment building is slowing everywhere, especially in Sydney, with Queensland also showing ongoing declines.
Overall, medium density construction fell throughout the 2019 financial year, with AiG's more timely surveys suggest plenty of further contraction to come.
It wasn't just housing construction that fell over FY 2019.
Non-residential construction work done plunged 6 per cent in the June 2019 quarter alone, while engineering construction was very disappointing in falling 16 per cent over the year.
The decline in engineering construction had for years been driven by Western Australia, but that is no longer the case with WA recording a decent rise.
The fundamentals for the WA economy are now looking much healthier; what's missing here is some more confidence.
Although a great swathe of infrastructure projects held New South Wales engineering work firm, elsewhere there were declines, while in the recessionary Northern Territory engineering work done has collapsed alarmingly by 87 per cent from its 2015 resources-driven peak as the Ichthys project construction phase fades.
GDP weakness continues
Overall these numbers were weak with construction work done falling 11 per cent over the 2019 financial year.
This is noteworthy because construction, especially the construction of dwellings, is known to have such a strong multiplier effect on other parts of the economy.
We don't have enough information yet to know for sure, but it looks quite possible that the economy grew only modestly in the June quarter following on from several consecutive quarters of soft growth.
This has already led commentary to speak of a 'per capita recession', whereby domestic product has been growing no faster than the rate of population growth.
It's a silly term, in some ways, but it looks like we might be stuck with it for a few more months yet!
JP Morgan downgraded its GDP growth forecast for the June quarter from 0.5 per cent to 0.3 per cent.
JP Morgan downgraded its GDP growth forecast for the June quarter from 0.5 per cent to 0.3 per cent.
