By Leith van Onselen
The Australian Bureau of Statistics (ABS) has just released the Engineering Construction Activity data for the December quarter of 2011, which shows a slowing of activity in the quarter after the huge run-up over the year:
In seasonally-adjusted terms, the value of total engineering construction work done fell -5.3% in the December quarter to $26,180.1m, with the private sector (-7.2%) leading the decline. This drop in activity partly offset the September quarter’s huge rise, where engineering work done rose by 20.8%.
In the 12-months to December 2011, construction work increased by 26.6%, led by the private sector (+39.1%), and has basically risen inexorably since the beginning of the commodities boom in 2004:
The fall in engineering construction work done in the December quarter was driven entirely by a large fall in Western Australia, which more than offset increases in the other states. Below are the quarterly and annual growth rates by mainland state, as well the dollar amounts of work done in the December quarter:
- New South Wales: +3% QoQ; +9% YoY to $5,221 million;
- Victoria: +7% QoQ; +9% YoY to $2,936 million;
- Queensland: +17% QoQ; +62% YoY to $8,576 million;
- Western Australia: -30% QoQ; +19% YoY to $7,424 million;
- South Australia: -2% QoQ; +9% YoY to $1,199 million.
You can see from the above figures that the mining states – Western Australia and Queensland – dominate Australia’s non-residential construction activity. As long as commodity prices remain elevated, engineering construction activity will continue to boom. But should commodity prices correct, say through a hard landing in China, than non-dwelling construction activity would likely fall precipitously as mining projects currently in the pipeline get cancelled, adversely affecting Australia’s GDP growth, employment and incomes.
