IN CHARTS: construction delays don’t impact demand

Adelaide Timbrell

Senior Economist, ANZ

Construction work done fell 0.9 per cent quarter-on-quarter in the first quarter of 2022 driven by sharp falls in Queensland (-4.4 per cent quarter-on-quarter) and New South Wales (-1.6 per cent quarter-on-quarter) as floods and heavy rain slowed construction activity. Supply chain issues didn’t help either.

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There was also some revision in fourth quarter 2021 data which was upgraded from -0.4 per cent quarter-on-quarter to +0.6 per cent quarter-on-quarter. However, even without this revision construction work done in the first quarter would still have been negative.

“The ability to complete the work was the reason for the decline of construction work done in the first quarter, not demand for work to be done.”

ANZ Research expects construction activity will detract from gross domestic product (GDP) mostly through the fall in private non-residential construction (-2.4 per cent quarter-on-quarter).

Both private engineering construction (+0.4 per cent quarter-on-quarter) and private residential construction (-0.03 per cent quarter-on-quarter) will have a negligible impact on first quarter GDP.

The ability to complete the work was the reason for the decline of construction work done in the first quarter, not demand for construction work.

On the commercial side, capacity utilisation continues to increase, while business profits have been resilient to inflation concerns in recent months.

On the residential side, work done fell but work yet to be done has been rising steadily as completions fail to keep up with building approvals and starts.

Adelaide Timbrell is Senior Economist at ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.