Australia’s public purse is doing its best to pick up the slack as Australia’s engineering and commercial construction collapse continues.
But “this alone will not be enough to turn prospects for spending on non-engineering projects” says Stephen Smith, a partner at Deloitte Access Economics, in the latest update of the firm’s Investment monitor.
Deloitte says that “engineering construction is falling away faster than expected – down by 27% over the year as major projects continue to wrap-up” and highlights that “non-mining investment is also showing significant signs of weakness”.
But the report also highlights some positives for the economy and for investment.
Smith says Australia’s growth is at trend which is “a very impressive position to be in at the tail end of a resources boom”. He highlights that “past resource booms have ended rather more dramatically”.
That means that so far the economic transition the RBA has been trying to engender is working to keep growth on an even keel. That’s something NAB chief economist Alan Oster has consistently highlighted with the monthly NAB business survey consistently showing business conditions, trading and profitability remains “solid”.
Likewise, even though investment has fallen sharply, Deloitte says (our emphasis):
The value of definite projects in the database (those under construction or committed) increased by just over $48.6 billion over the quarter, a 12.7% rise. This takes the value of definite projects to the highest since June 2015.
The Reserve Bank has said the end of the mining investment boom will continue to be a drag on the economy into 2017. Perhaps this survey shows we are approach that point in time.