Australia: Q3 Construction work spikes on imports of LNG platform(s) - Westpac

Andrew Hanlan, Research Analyst at Westpac, notes that Australia’s construction work spiked in Q3 by 15.7% to +$8.4bn, and was inflated by the importation of floating LNG platform(s).

Key Quotes

“The construction work survey reports that construction work spiked in Q3, up a staggering $8.4bn, +15.7%. That follows a 9.8% increase in Q2.”

“We will be looking through this headline figure. Currently, the CWD survey is not a reliable partial indicator for the national accounts.”

“The CWD survey is allocating the full value of imported LNG platforms when there is a change of ownership / when the structure is imported. However, the national accounts is including the value of construction work on projects progressively, as actual work occurs – this is for both investment and for imports. By way of comparison, in Q2 the CWD survey reported private infrastructure up 32%, the national accounts estimate was a -1.9%.”

“For the record, the CWD survey reports that private infrastructure rose 46.4% in Q3 (+$8.0bn), following a 32.5% increase in Q2.”

“Detail outside of private infrastructure are of use as partial indicators for the national accounts.”

“Public works and private building activity together rose by 1.1% in Q3, a little softer than our forecast of +1.5%.”

“Public works is in a strong upswing, +3.3% in Q3, led by infrastructure works, +6.1% in Q3, notably transport projects.”

“Private building work disappointed a little, with a broadly flat outcome, weighed down by a surprise 6.8% drop in home renovation work. Private new home building work advanced modestly in the quarter, +0.6%, ahead of a looming downturn in 2018. Private non-residential building activity increased by 1.0% in the period, the start of a solid lift, as foreshadowed by a lift in building approvals, particularly for office projects, led by Victoria.”