There was a strong rise in construction work done figures for the September quarter but recent positive housing data does not seem to be translating into more homes being built.
Completed construction projects in Australia rose 2.7 per cent in the September quarter, the Australian Bureau of Statistics said, better than expectations of a 0.5 per cent rise.
The amount of residential building work done was unchanged in the quarter, while non-residential building rose 3.7 per cent and engineering work grew 3.5 per cent.
“Although today’s outcome is a positive for the economy in general, it is most likely not an accurate reflection of activity at the consumer level,” JP Morgan economist Tom Kennedy said.
“We have seen an uptick in building approvals and the housing sector in general but at this stage it has failed to translate to a higher level of construction activity.”
Because of the substantial lag time between commencement and completion of dwelling construction, an increase in the number of building approvals will likely be reflected in construction data over the coming quarters, he said.
Commonwealth Bank economist Gareth Aird said there are signs the peak in mining investment had been reached.
“Engineering construction rose to its highest ever quarterly level,” he said.
“This is consistent with our previously held view that mining construction is likely to peak in second half of 2013.
“Looking ahead, large scale LNG projects in WA and Qld will mean that engineering construction remains at elevated levels over the near term.”
According to a report by the Bureau of Resources and Energy Economics published on Wednesday, the transition of the mining boom from investment to production phase is now happening.
It said there were 63 resources projects with a combined value of $240 billion at the committed stage, compared with 73 projects with a combined value of $268 billion six months earlier.
“The decline in value is the result of a record period for projects moving to the completed stage,” Mr Aird said.
