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Creation Date: Tue, 31 May 2011 GMT

Construction rise misses forecasts

Economists say a weaker-than-expected result for construction work in the first three months of the year is bad news for the first-quarter economic growth figures.

Bureau of Statistics data show total construction work rose 0.7 per cent during the March quarter.

The market was expecting a rise of 1.5 per cent.

A senior economist at Citi Joshua Williamson says a fall in public infrastructure spending was behind the weaker-than-forecast numbers.

"A lot of the weakness was contained in public sector building construction, and really that is the tail end of this infrastructure boom that the [Federal] Government initiated to help Australia through the global financial crisis," he told ABC News.

"So when we actually exclude that, we actually saw a surprisingly strong increase in private sector residential dwelling investment, which is going to be a positive for the GDP release that comes out next Wednesday."

However, while the private sector construction component will contribute to growth, Mr Williamson says it will not be enough to offset a big fall in exports.

"It's going to add around about 0.3 of one percentage point to economic output in the quarter," he said.

"The bad news though is that it's unlikely to actually prevent a negative result - we're forecasting a negative 0.3 per cent result for first quarter GDP, which would be the weakest quarterly result in over two years."

The first-quarter growth figures will be published by the ABS next Wednesday.

Source: ABC news online website