The ABS this morning released engineering construction data for the December quarter of 2012, which revealed flatlining strong growth in the value of work done but also a continued shrinking of the construction pipeline, which corresponds with the upcoming peaking of the mining investment boom.
According to the ABS, the total value of engineering construction in real seasonally-adjusted terms fell by -1.7% in the December quarter but was up 18.6% over the year, driven entirely by the private sector (see below chart).
You can see the big uplift in activity from 2003 as the commodity price boom took hold, with the key mining states of Western Australia and Queensland driving most of the increased construction activity. However, construction activity dropped-off sharply in Western Australia over the December quarter, partly offset by increasing LNG-related activity in the Northern Territory (see below chart).
There are clouds developing on the horizon, however, with the pipeline of construction projects continuing to shrink, albeit from highly elevated levels. After peaking at $161 billion in September 2011, the pipeline of construction projects – both commenced and yet to begin – fell to $138 billion as at December 2012, consistent with the view that Australian mining investment will peak sometime over the next 12 months (see below chart).
