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Construction up marginally in Sept quarter


Quarterly construction numbers show mining industry activity marching along strongly.

But the data released by the Australian Bureau of Statistics (ABS) on Wednesday also show public and private building remain weak and government spending cuts hit public construction particularly hard.

Construction activity rose by 1.7 per cent in the September quarter, with a 6.0 per cent rise over the year, according to the ABS figures.

This was close to economists' expectation of a 2.0 per cent rise in the quarter.

But while private engineering work - aligned with the mining industry - rose by 7.8 per cent in the September quarter, private and public building, and public engineering remained weak.

Public sector construction was weak overall, falling by 7.3 per cent in the September quarter.

JP Morgan economist Tom Kennedy said he was not surprised by the numbers.

"It looks like the weakness has once again been on the public side of things and that is not really surprising given the fiscal objectives of both federal and state governments," he said.

However, this was balanced by the strength in mining construction activity.

"Obviously, it's not a fantastic result (overall) but I guess the silver lining is that the weakness is on the public rather than private side."

HSBC chief economist Paul Bloxham said the numbers showed that mining activity was still going strong.

"We're still seeing strong growth in engineering, so it looks like the mining boom is continuing," he said.

He added that a rate decision by the Reserve Bank of Australia (RBA) next week could be a close one.

"I think they could afford to cut interest rates further ahead of Christmas," Mr Bloxham said.

"But I think it will go down to the wire. We still have more information to come, with capex (capital expenditure) due tomorrow, retail sales data on Monday."

The RBA left rates unchanged at its meeting on November 6, after easing in May, June and October.