Below find a Westpac’s quarterly assessment of the progress of mining investment, which shows the first fall in the investment pipeline since 2010, though obviously still strong coincident growth.
The Australian infrastructure construction sector continued to show strength in the middle of 2012. There were a number of notable features apparent in the June quarter update.
Commencements were broadly stable, at a high level, underpinned by projects outside of oil and gas. Construction activity accelerated further.Some progress was made in reducing the sizeable pipeline of work outstanding.
Projects starting construction in the June quarter were valued at $20.2bn. This was all but unchanged from the $21.0bn figure for the March quarter.
While the wave of investment in oil and gas projects boosted commencements in 2009, 2010 and 2011, the official figures report that this was not the case over the first half of 2012. Though, we note that two major gas projects, Wheatstone and Ichthys, which have been given the go ahead, are yet to be included in the numbers.
Excluding oil and gas, commencements have been broadly stable over the last five quarters, averaging $19.2bn. The June quarter result was right on this $19.2bn average and follows $20.2bn for March.
The split of commencements for June was: $7.8bn of public projects; $1.1bn of oil & gas projects; $4.7bn of other mining projects; and $6.6bn of private non-mining projects.
On a state basis, commencements ticked higher in NSW, to $6.2bn from $4.8bn for March, ticked lower in WA, to $4.7bn from $6.1bn, and were relatively stable elsewhere.
Construction activity in the infrastructure sector has strengthened significantly since the second half of 2009, with the value of work rising to $31.9bn for the June quarter. This is up 35% from $23.6bn for the June quarter 2011 and up 23% from $19.2bn for the June quarter 2010.
Some progress was made in reducing the sizeable pipeline of work outstanding. The ABS estimates that the value of work yet to be done on projects currently under construction declined from $138.7bn for the March quarter to $132.3bn for the June quarter. This was the first decline since June quarter 2010. (Note, “variations” to projects under construction can impact estimates of the work pipeline.)
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