The ABS this morning released engineering construction data for the March quarter of 2013, which revealed solid falls in the value of work done but a slight increase in the construction pipeline.
According to the ABS, the total value of engineering construction in real seasonally-adjusted terms fell by 3.0% in the March quarter and by 0.1% over the year, with both the private and public sectors experiencing falls (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 has dropped-off sharply in Western Australia recently, whereas activity in Victoria and New South Wales has also declined. By contrast, engineering construction continues to boom in Queensland, most likely due to some large LNG projects currently underway around Gladstone (see next chart).
Despite some modest improvement in the March quarter, there are clouds developing on the horizon, with the pipeline of construction projects shrinking, albeit from highly elevated levels. After peaking at $184 billion in March 2012, the pipeline of construction projects – both commenced and yet to begin – has fallen to $141 billion as at March 2013, consistent with the view that Australian mining investment has probably peaked (see below chart).
