Third quarter figures for construction work done rose 12.5% with engineering construction up 22.6% over the same period, according to HSBC Australia & New Zealand chief economist Paul Bloxham. This is significantly more than the consensus expectation of a 2% rise.
Economists use construction work done numbers as a partial indicator of gross domestic product (GDP). Bloxham says this increase “should underpin strong GDP numbers for Q3 … and is evidence that growth is already being significantly boosted by mining investment”.
The 22.6% increase in engineering construction was driven by mining investment, he reports, taking the year-on-year rate to 48.9% with private engineering construction rising by 72.4% over a comparative period.
While private construction was on the increase, public construction work has fallen into decline “down 3.9% in the quarter, as the government’s post-GFC stimulus continues to unwind,” according to HSBC’s report.
Engineering construction accounts for around 5% of the economy, so partial data suggests that mining investment alone should contribute more than one percentage point to Q3 GDP growth. The bottom line is, “the mining investment boom has supported strong growth in Q3,” says Bloxham.