The ABS have just released their Q3 construction release (8755.0) with the value of work completed falling 2.2%, a result that was below expectations for a drop of 1.0%. All sectors recorded declines over the quarter with the value of residential, non-residential and engineering work falling 1.6%, 0.1% and 3.2% respectively in seasonally-adjusted, chain-volume terms.
Largely as a result of the wind-down of the mining capex boom the total value of engineering work has fallen 1.5% from September 2013, the first annual decline recorded since Q2 2002. Elsewhere the value of residential construction has risen 8.9% over the past 12 months, the fast annual growth since Q4 2010, while non-residential construction has increased 0.7%, down from 4.0% in Q2 2014.
While it is clear that there is some rebalancing taking place, residential construction is trending higher, it should be noted that engineering construction, despite the sharp decline witnessed in recent quarters, still makes up 56.1% of all construction spend. With the largest component sliding sharply it does beg the question whether the other components are likely to offset the continued slide expected in the year ahead? As they have noted many times this year the RBA lowered rates to spur construction activity in non-mining sectors of the economy. As it sits at present the pick-in those areas looks unlikely to stem the overall decline ahead.