Via the excellent Damien Boey at Credit Suisse:
From the ABS’ engineering construction release, we learn that public work done fell by roughly 13% in the year-to-1Q. So much for the story that infrastructure would be a stronger for longer growth driver. As discussed in previous articles, the issue is stock-flow confusion. Infrastructure spending has hit a very high level. The pipeline of infrastructure work to be completed over several years is much higher than work currently being done. But amortizing the stock of work to be done into annualized spending flows, in actual fact, the depth of the project pipeline is not consistent with growth in the level of spending from an already high level. Indeed, our estimate of the public works pipeline, based on project commencements versus project completions, is still pointing to lower spending in the next few quarters. In other words, more projects needed to be added to the pipeline just to keep spending at a steady, and high level. This is because too many projects are now coming to completion, and are therefore rolling off the spending pipeline.
