Civil construction continues to boom in Queensland even as the outlook for building in the state continues to deteriorate.
Following the start of the Australia Pacific LNG Project last year, as well as a massive re-build of civil infrastructure as part of disaster recovery efforts, the state’s overall construction sector is expanding rapidly (see chart below). Figures from the Australian Bureau of Statistics (ABS) show that the total value of work done in both the June and September quarter last year was far higher than at any other time on record.
As can be seen from the chart below, however, engineering is running hot whilst building remains in a slump. Indeed, seasonally adjusted building activity registered its lowest level in the September quarter since the June quarter of 2003.
Going forward, the outlook for engineering construction remains extremely strong as the anticipated boost from Santos’ $16 billion GLNG Project adds to existing momentum from Australia Pacific LNG.
That for building, however, is awful. At $2.756 billion (seasonally adjusted), the value of new buildings approved in during the three months to November was lower than at any other three month period since June-August 2003. This means that not only is building activity at eight year lows as mentioned above, so too is the rate at which new building work is coming in.
The residential sector is in dire straits. In October and November, the seasonally adjusted number of dwelling units approved came in at their third lowest and lowest levels respectively since March 2001. To be sure, the recently announced extension to the Queensland Government Building Boost Grant, along with the November and December rate cuts, may provide some support to residential construction this year. Granted also, the state has recorded four consecutive months of growth in new home sales – though the 4.7% growth in seasonally adjusted sales of new detached houses recorded in November was well below the national average of 8.4% during that month. Nevertheless, with approval figures as they are, a recent upbeat assessment from Queensland Deputy Prime Minister Andrew Fraser about the sector’s near term prospects should be viewed with caution.
Thanks to the boost from mining, the state’s economy grew by 3.5% in each of the June and September quarter last year. There are signs, however, that the broader economy outside of mining is flat. Retail sales growth, for instance, grew by a paltry 1.1% in the six months to November.
Furthermore, despite the boost from mining, the state’s construction labour market remains subdued. At 202,200, the number of people employed full time in construction in the state during the three months to November last year (not seasonally adjusted) was well down on the same period in 2010 (217,600).
Key Moving Sectors
Thanks to ongoing work on the Australia Pacific LNG Project, as well as a host of other projects, activity on mining and related infrastructure is running hot.
- Australia Pacific LNG Project
- Grosvenor Metallurgical Coal Project
- Curtis Island LNG Tunnel
- Carmichael Coal and Rail Project
- Teresa Underground Coal Project
- Paradise South Phosphate Project
- Caval Ridge Mining Project
On a related note, activity is strong in transport infrastructure thanks to demand from mining related infrastructure and urban transport infrastructure.
- Gladstone Coal Terminal
- Dudgeon Point (new giant coal port)
- Carmichael Coal and Rail Project
- Gold Coast Rapid Transport System
- Wiggins Island Rail Project
- Sunshine Coast Airport Expansion Project
- Townsville Ring Road – section 4
Thanks to Santos’ $16 billion GLNG Project, the immediate outlook for energy related construction is very strong.
- Santos GLNG Project
- Woleebee Creek to Glen Weir Project (pipeline)
- Lower Fitzroy River Infrastructure Project
- Solar Dawn Consortium Project