SPENDING on construction is expanding as its fastest pace on record, as a torrent of investment flows into the country’s mining hot spots.
The value of construction work completed in the September quarter soared by 12.5 per cent to $47.5 billion, the biggest jump in the 25-year history of the figures, the Bureau of Statistics said yesterday.
The resource industry drove the surge, with the value of major engineering projects up by 22.6 per cent in the quarter and almost 50 per cent in the last year.
Despite Europe’s financial woes casting a cloud over Australia’s economic outlook, the increase suggests economic growth was robust in the latest September quarter.
Engineering construction – such as infrastructure and mining projects – makes up about 7 per cent of gross domestic product, and the sector is set to play a growing role as the resource boom takes off.
Economists said the rise – concentrated in Western Australia – underlined the resilience of the mining boom in the face of growing market unease about Europe.
Ben Jarman, an economist at JPMorgan, said the figures were further confirmation that mining investment was not being deterred short-term financial market fears.
But he said consumer spending and confidence would be vulnerable to Europe’s debt crisis in the months ahead.
”We’ve got a lot of bad news still to come through the pipeline,” Mr Jarman said.
The mining powerhouse of Western Australia drove much of the growth, as the value of major infrastructure projects completed in the state has almost doubled in the past year alone.
Western Australia is by far Australia’s fastest-growing state, according to separately released official figures showing its gross state product grew 3.5 per cent in 2010-11 compared with the national average of 2.1 per cent.
The ACT was in second place at 2.8 per cent followed by Victoria at 2.5 per cent and New South Wales at 2.2 per cent. Queensland’s economy shrank 0.2 per cent as a result of lost mine production due to the floods and cyclone.