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The construction sector activity improved at the end of 2014, helped by a surge in home building.


The amount of construction work done in the December quarter fell 0.2 per cent, but that easily beat economists’ expectations and was much better than the 2.8 per cent fall in the September quarter.

Home building made up for losses in other sectors, with residential work up by 2.5 per cent in the quarter.

Engineering work, which includes mines, roads, bridges and the like, was down 0.6 per cent, the Australian Bureau of Statistics said.

CommSec chief economist Craig James said it was not a bad result, with residential strong.

“Overall, it’s not a bad result, and when you look at it across the state and territories, there was only Queensland and the ACT which basically led the weakness.”

JP Morgan economist Tom Kennedy said the figures were better than the market had expected, and suggested that residential construction would offset the losses from the decline in mining construction.

“At the margin, that’s a slightly more positive reading for gross domestic product next week,” he said.

“It suggests that even though things have slowed a bit, perhaps that slowdown wasn’t as severe as many had expected.”

Mr Kennedy predicts engineering construction will weaken further after hitting all-time highs in recent years.

“We are going to see a normalisation in the resource investment pipeline going forward and that’s going to be reflected in these numbers,” he said.

“But, partly offsetting that is an upturn in residential spending and, hopefully, spending across the broader economy.”


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