The Australian economy grew at a marginal pace during the September quarter, slowed by the collapse of three sectors, including residential construction.
Australian Bureau of Statistics (ABS) figures show that Australia's GDP grew 0.4% on a seasonally adjusted basis, down from the market consensus of 0.5%.
"The economy has continued to grow, however, the growth rate remains well below the long-term average," said Bruce Hockman, chief economist of ABS.
On an annual basis, the Australian economy grew by 1.7%, well below the trend of the 3% growth rate.
Disappointing economic growth during the quarter was attributed to the slowdown in three sectors: technical construction, residential construction, and private enterprise investment.
All states except Tasmania and Victoria reported a decline in construction activity. South Australia experienced the largest decline in construction work.
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The sluggish conditions in the construction sector are not helpful from the point of view of encouraging companies to invest, said Chief Economist of Master Builders Australia, Shane Garrett.
"Obviously, the pace of construction of new infrastructure started slowing down not only the construction activity, but the overall economy. The weakness of construction activity clearly hinders growth in other sectors of the economy, "he said.
Rising GDP seems to mask a "worrying drop" in housing construction, said Ken Morrison, managing director of the Property Council of Australia.
Residential construction fell 2.1% in the quarter while multi-unit construction fell 3.7%. Over the past year, investment in housing construction has declined by 11%.
"That means fewer jobs in housing construction and fewer homes provided to our growing population, especially in our larger cities," Morrison said.
Morrison said that residential construction is one of the biggest growth drivers of the Australian economy.
"It is also essential to ensure that we have a strong pipeline of new housing coming to the market to meet demand and support accessibility," he said.
Morrison said this should be seen as a sign that the recent rebound in housing prices is not translating into new construction and new economic activity.
"Commonwealth, state, and territorial governments must take a holistic view of the housing sector and propose the right policies and planning plans to stimulate investment and support growth," he said. -he declares.
Garrett shared the same sentiments, adding that it was necessary for the government to do more to speed up the construction of infrastructure projects.
"Although megaprojects take a long time to activate, there are many opportunities to accelerate smaller projects outside of Sydney and Melbourne, including in the region of Australia. Many of them can be delivered by smaller and local construction contractors, which helps to multiply the economic benefits, "he said.
During the quarter, household consumption barely moved, up only 0.1%. This despite recent tax cuts and rates, which should boost spending.
Weak household consumption could increase the likelihood of further rate cuts by the Reserve Bank of Australia, said NAB analyst Kaixin Owyong.
"This suggests that the underlying health of the economy has further deteriorated and is likely to put upward pressure on the unemployment rate." This reinforces our view that further monetary easing is needed, "she said.
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