CONSTRUCTION activity slipped in the March quarter from record highs with weaker private sector work offsetting a sharp rise in public sector work. Construction work carried out eased by 3.7 per cent.
According to Craig James, the chief economist at CommSec, private sector firms were understandably reluctant to go ahead with construction projects in the first three months of the year.
"And while the public sector filled some of the shortfall, it wasn't enough to prevent construction work from easing from record highs," Mr James said.
"While builders have been less active in recent months, the drop in activity needs to be kept in perspective. It was only the first quarterly fall in construction work in nine months and from record levels.
"By all accounts, the drop in construction activity will prove temporary."
The data also confirms Rider Levett Bucknall's view that the current cyclical decline in construction activity may not be as severe as has been forecast.
Dr Andrew Wilson, the senior economist at Rider Levett Bucknall, said the figures showed the industry may be in better shape than expected in some quarters.
Industry workloads, however, remained at comparatively high levels with only residential construction activity below that for the March quarter of 2008.
Annual activity comparisons reveal that for the year ending March 2009, construction workload was 9.3 per cent above that recorded for the year ending March 2008. Engineering construction was a significant contributor to this outcome with an annual rise of 16.53 per cent.
"The ABS data reveals the nature of the Australian construction industry within the context of a now-evident significant national economic downturn," Dr Wilson said.
"Importantly, this data provides some foresight into prospective construction labour shedding and, given the strong economic links that construction has with the general economy, the impact on future general Australian unemployment levels through the multiplier effect."
Dr Wilson said that given the shortage of skilled construction workers in recent years, significant labour shedding was unlikely.