Coronavirus: Rosy data lifts hopes of avoiding recession

Better than expected construction data has offered hope that Australia may yet continue its 28-year recession-free streak.

JPMorgan economist Ben ­Jarman says he still expected a 0.4 per cent fall in GDP.

Better than expected construction data has offered a glimmer of hope that Australia may yet continue its 28-year recession-free streak despite the COVID-19 slump, economists say.

Construction work fell 1 per cent to $49.5bn over the first three months of the year and to its lowest level in a decade, according to seasonally adjusted figures from the Australian Bureau of Statistics.

That was better than the consensus estimate among economists for a quarterly drop of 1.5 per cent, and suggested construction would not drag as heavily on GDP growth, which will be revealed in next Wednesday’s national accounts.

A powerful contribution from the booming trade sector, led by a surge in iron ore and coal exports, has laid the foundation for an unlikely escape from two consecutive quarters of economic contraction.

JPMorgan economist Ben ­Jarman said he still expected a 0.4 per cent fall in GDP, but there was a chance the economy could ­simply stagnate in the March quarter.

Should the predicted rebound occur in the three months to September, then “the outside possibility of avoiding technical recession remains in play”.

With the economy projected to shrink by as much as a tenth in the June quarter, and with hundreds of thousands of jobs lost, it would be little cause for celebration.

Mr Jarman noted that avoiding a recession as traditionally measured would only “serve to highlight the very narrow nature of that definition”.

The ABS data showed ­residential building work fell 1.6 per cent, down for the seventh consecutive quarter and leaving it 16 per cent off its peak in mid-2018.