Stronger-than-expected construction activity will have added to economic growth in the third quarter, and could give the central bank ammunition to slug borrowers with a pre-Christmas rate rise, economists say.

Total construction work done in Australia rose by a seasonally adjusted 2.2 per cent in the September quarter, beating market expectations of a 0.5 per cent fall, the Australian Bureau of Statistics (ABS) said on Wednesday.

The work done was valued at $39.632 billion, compared with an upwardly revised $38.787 billion in the June quarter.

CommSec economist Savanth Sebastian said the figures could help convince the Reserve Bank of Australia (RBA) to raise rates by a quarter of a percentage point to 3.75 per cent when the board meets next Tuesday, December 1.

As well, the survey indicated the dwelling investment component of the September quarter national accounts could have risen by about 2.5 per cent from the June quarter.

“It would be the first positive contribution to growth in a year,” Mr Savanth said.

“It gives the RBA further ammunition to raise rates come next week.

“But as we saw back in 2007, when costs were rising astronomically and capacity constraints were on the cards, we think the RBA will try to be ahead of the game and raise rates again in December.”

The central bank lifted the cash interest rate for the first time in 19 months in October, taking it from an emergency setting of three per cent to 3.25 per cent.

That move was followed by a further 25 basis point rate hike to 3.50 per cent in November.

If the RBA lifts rates again next Tuesday, it will be the first time since January 1990 it has taken rates higher three months in a row.

“The RBA is at the moment focusing on the monthly data, and that’s really suggesting a rate hike is on the cards,” Mr Savanth said.

The ABS also said total building work done in the September quarter rose to $18.676 billion, seasonally adjusted, from $18.208 billion in the June quarter.

Engineering work done rose to $20.956 billion in the September quarter, from $20.578 billion.

While the headline construction number grew, there was a large gap between public sector and private sector construction.

Public sector construction rose by the biggest amount in the 23 year history of the series.

It was up 17.6 per cent in the quarter and up 39.7 per cent over the year.

But private sector construction contracted by three per cent in the quarter and by 2.6 per cent over the year to September.

“Although we saw some sizeable falls in the private space, we did see some increase in private engineering in quarter two,” ICAP economist Adam Carr said.

“I think you can put the private sector fall down to a bit of volatility and realistically, what the RBA will be focussing on, is the (total) rise in public and private investment.”

The ABS is due to release the September quarter national accounts, which include gross domestic product numbers, on December 16.

AAP