Pete Wargent blogspot
Co-founder & CEO of AllenWargent property advisory, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.
4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.
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Sunday, 25 September 2016
When construction winds down
Australia's GDP increased to $1.67 trillion in financial year 2016, measured in seasonally adjusted Chain Volume Measures terms, now tracking at just above $420 billion per quarter.
Following on from yesterday's post, a quick look here at industry gross value added (GVA).
Having accounted for just over 5 per cent of industry GVA three decades ago, mining's share has swelled to 8.9 per cent as export volumes begin to ramp up.
Finance and insurance also now accounts for 8.9 per cent of industry GVA, up from just 4.9 per cent in 1986.
You can click on the chart to expand it (or use the touch screen, if you have one of those, of course).
On the other hand, manufacturing is shrinking as a share of the pie, declining from a share of 11.1 per cent at the beginning of this chart to just 5.8 per cent in 2016.
The latest figures show that the contribution of construction to GDP has remained solid at 7.6 per cent, tracking at around $32 billion per quarter.
A decade ago construction was contributing only $13 to $14 billion per quarter.
This suggests that the planned 'hand-off' from resources to residential construction was generally a success between 2012 and 2016.
However, this does also mean that as residential construction eventually winds down there will be quite a hole in domestic demand to be plugged by something other than rising mining export volumes.
Given the respective skill-sets of all those construction workers, tradies, and project managers, the answer should be: infrastructure and non-residential construction, as I looked at in a bit more detail here.
Indeed, the unprecedented stamp duty windfall from Sydney's property boom is already funding a range of infrastructure projects in Sydney and New South Wales.
But what about the gaping gulf left behind in the resources regions?
Troubling, and this may be leading to an exodus of regional workers.