Australia needs other sectors of its economy to pick up the slack as the mining boom winds down.
Luckily, according to a CBA analysis it looks like non-mining areas will be strong enough to do this in time for the peak impact of lower mining investment next year.
Commbank’s economics team says the engineering construction data released this morning is great news for the Australian economy, with a 7.9% rise in private engineering construction stronger than indicated in the Q3 2013 national accounts.
Importantly the release of the data has enabled CBA to “undertake more detailed analysis on engineering construction work done, work commenced and work yet to be done by sector and State.”
Their conclusion is a very positive one for the economy:
The peak impact of lower mining investment looks like it will occur around 2015. By this time, we expect that the non‑mining economy will have picked up enough to offset lower levels of mining investment. We are already seeing signs of a rise in consumer spending growth and a well entrenched recovery in the housing sector.
Looking at the state break up there is a clear divergence with the mining states still looking very strong, but NSW off 12.3%.