"The weaker franc in recent weeks is helping exports but as long as there is no demand in the Eurozone, they will remain weak "
- Credit Suisse economist Maxime Botteron
Australian construction sector took another hit in the quarter of 2013, even with borrowing costs close to record lows. The amount of construction work done tumbled 2% during first three months of this year, down from a 0.1% expansion in the previous quarter, and below analysts' expectations, who called for a 1.1% growth. Compared with the same period last year, total construction done was up just 0.2%. The sector is struggling to grow even despite measures introduced by the Reserve Bank of Australia, which cut its cash rate 1.25 percentage points during the previous year, partly to stimulate underperforming sectors of the economy. Earlier this month the RBA cut its benchmark interest rate further, reaching a record low, driving down a currency that has damaged manufacturing, construction and boosted unemployment.
As the construction work slowed and mining investment is peaking there are signs that the economy may struggle to grow this year. However, it is expected that retail sales and exports will support the economy in the quarter. At the same time, home sales surged by 3.9% in April, aided by a 6.7% jump in detached house sales, suggesting the housing market is on the path of recovery and may provide the economy with additional boost.
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