The latest Deloitte Access Economics’s Investment Monitor shows we’ve just seen the biggest fall in construction projects since the depths of the Global Financial Crisis.
The value of definite projects (those under construction or committed) dropped back by almost $25 billion over the December quarter of 2013.
The most significant quarterly fall since the December quarter of 2008 was driven by a 1.2% fall in the value of definite projects over the last year.
Overall, the total value of projects in the Deloitte Access Economics database decreased by more than $7.4 billion.
The total value fell to $866.3 billion, representing a 0.8% fall from the September quarter of 2013 and a 9.2% fall compared to a year earlier.
The value of planned projects (those under consideration or possible) rose solidly during the December quarter, up by more than $17.5 billion.
A $40 billion increase in the value of projects under construction was partly offset by a $22.3 billion fall in the value of possible projects.
Deloitte Access Economics calls it the Stall Before The Fall, the decline in investment as resources infrastructure building winds down in Australia.
This chart shows the value of definite non-resources projects as a share of definite resources projects has been declining for a decade.
Deloitte Access Economics:
“The peak and subsequent decline in resources investment will place pressure on other areas of the economy to pick up the slack. While low interest rates appear to be helping residential building activity and retail sales, Investment Monitor data continues to point to a soft profile for non-resources investment.”
More recent data on non-resources projects looks stronger.
However, stripping out two of the larger non-resources projects – the National Broadband Network and Sydney’s Barangaroo development – shows little to get excited about.
“When the NBN and Barangaroo are excluded, transport projects account for half the value of definite non-resources projects, along with more than two-thirds of planned work,” says Deloitte Access Economics.
“A solid platform of transport infrastructure spending is not a bad thing, but a broader base of work will be needed to support construction sector activity as resource investment fades.”
This chart shows investment by selected sectors: