Australian construction output rises strongly in Q2 2018

Australian headline construction data for the second quarter came in solid, while the first quarter’s data was upwardly revised. Construction in the nation rose 1.6 percent sequentially in the June quarter, while the first quarter’s data was upwardly revised to 2.4 percent from 0.2 percent. The strength in the second quarter was mainly driven by the housing segment, while both non-residential building and engineering construction also rose.

As was anticipated, the public sector recorded the best result, rising 2.5 percent. This is in line with the large backlog of work, particularly in the engineering space. The first quarter saw the commencement of several billion dollars of road and rail projects, particularly in Victoria. While the state did not build further on the first quarter’s 20 percent rise in activity, work is still sitting around record levels, which is also true in New South Wales, noted ANZ in a research report. The volume of work already in the pipeline signifies this sector likely has further growth to come.

Privately funded work also rose, rising 1.3 percent. Most of this came from the housing segment, with New South Wales and Victoria leading the way. Meanwhile, privately funded engineering construction dropped slightly by 1.1 percent. This possibly reflects the remaining drag from the mining sector, which should be complete in the next six months.

At 14:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was neutral at -18.98, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -57.868. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex