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Wednesday, 26 February 2020

Crumbling foundations

Construction wind-down

Residential construction work done was 13 per cent lower year-on-year in the final quarter of 2019 as apartment and townhouse construction activity continued to plunge in Sydney and Brisbane.

Melbourne's cranes have largely remained in situ as the population growth hub of Australia (as I can testify in person this week). 

Attached dwelling construction work has fallen by 17 per cent over an 18 month period, and there's plenty more to come here too. 

Commercial construction has held up reasonably well, especially for healthcare centres and similar activity, but engineering construction was also 8 per cent lower over the year, so there are (literally) some big holes to fill here in the Aussie economy. 

Overall, this was a nasty miss, with construction work shrinking by 7.4 per cent in 2019, and this is before the full force of the bushfires and coronavirus will hit home in the first quarter 2020. 

Total construction work done in the quarter was under $50 billion, well down from $66 billion at the peak in Q3 2017. 

Further policy stimulus is unequivocally required, and this is not just the opinion of commentators, but well reflected in financial markets too. 

Source: Fidelity


Another messy open in European markets.