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.
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Activity in the construction sector contracted for the eighth consecutive month as the dire economic outlook Has led to fewer projects being developed, a survey has found.

The Australian Industry Group-Housing Industry Association performance of construction index (PCI) rose 4.6 index points to 36.4 points in October.

The index rose from its low of 31.8 points in September, the weakest reading since the survey began in September 2005.
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