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SA construction sinks to national low

Tuesday, 30 July 2013
Author: Kevin Naughton, Indaily

Engineering construction work underway in South Australia has slumped by more than 25 per cent in the last year, a major economic report said today.

The SA decline is the worst of all the states and territories for the period from June 2012.

"The past year tore shreds off the value of engineering construction work in South Australia," said the Deloitte Access Economic Investment Monitor's analysis for June 2013. "That said, there is a notable planning agenda for resource projects in South Australia - though no major projects have received the go-ahead of late."

Investment under construction values have fallen from $13.6 billion to $8.89 billion in the last year.

The decline is more pronounced in the June quarter, with total investment in South Australia down 38 per cent since the March quarter.

On the national front, the construction sector has been unable to fill in the gap left behind by the mining investment slowdown, despite economic stimulus measures.

"The last few months could be seen as somewhat of a turning point for the Australian economy," the Deloitte analysts said.

"The Reserve Bank cut official interest rates to the lowest level on record, citing below-trend growth and moderate inflation.

"The $A fell sharply, trading at around US 90 cents in mid-July, down from more than US$1.05 in mid-April.

"And the value of resources projects in the Investment Monitor database fell for a second consecutive quarter - the first such occurrence in a decade."

The value of projects decreased by $51.8 billion to $877.1 billion - a 5.6 per cent fall from the March quarter of 2013 - to be 4.7 per cent lower than a year ago.

While the value of definite projects continued to grow, the value of planned projects in the database (those under consideration or possible) fell by $68.3 billion (or 14.3 per cent) compared to last quarter.

"The profile of work in the Investment Monitor database suggests a peak in activity through 2013-14 is likely," the report suggested.

"Beyond that, the sheer volume of work in the pipeline means that a plateau may be in store."

On the national front, the current level of spending is dominated by just seven huge LNG projects, and the further they progress the closer the peak in engineering construction activity becomes.

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