Construction data fits established pattern

29 Aug 2012, 12:20 pm   -   Source: AAP

Economists were not surprised by official construction data for the June quarter, saying it fitted a previous pattern of overall softness.

Australia's construction data continues to follow a weak trend, with some optimism around engineering, economists say.

Figures released by the Australian Bureau of Statistics on Wednesday show a fall of 0.2 per cent in total construction work done in the June quarter.

The median market forecast was for a 1.9 per cent rise.

CommSec chief economist Craig James said the data was in line with the pattern seen in the construction sector.

"We would have expected residential and commercial building to be down, and that's been the case," he said.

"There was only a modest rise in engineering work. But that fits the pattern we've been seeing: overall softness in terms of building work, and a degree of strength in engineering."

Mr James said he expected engineering construction to soften in the coming months, as mining companies pared back activity.

National Australia Bank senior economist Spiros Papadopoulos said the result was "disappointing".

"It was a bit softer than we expected, and obviously, continuing to be dragged down by the weakness in building activity," he said.

He said it was likely to take another two quarters for the Reserve Bank of Australia's May and June interest rate cuts to have an impact on housing construction data.

However, Mr Papadopoulos said, he had expected the data to show an improvement in non-residential construction.

"There's not too much surprise that we are still seeing the weakness on the residential side but we were a bit more hopeful to see a bit more growth in the non-residential side."

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