Australia

The Australian unemployment rate increased in July from 4.1% to 4.2% with a record participation rate of 67.1%.  Nevertheless, Economists were surprised with the strong employment growth, up a further 58,200 in July.

According to the RBA, CPI inflation increased by 1% in the June quarter. Over the 12 months to June 2024, CPI rose 3.8%.

Oxford Economics has reported that Headline engineering construction work done, rose 6.6% year-on-year to $28.6bn over the March 2023 quarter, driven by strong growth in utility and mining work.

Oxford Economics has forecast activity to grow 10.1% in FY25 to $136.1bn (constant FY22 prices), supported by the ongoing rebound in mining investment and continued work to decarbonise the electricity network.

The government funded transportation infrastructure boom continues to support growth in engineering construction activity. Annual growth is estimated to have slowed to 7.1% over FY24.

The construction sector continues to struggle with labour shortages. The wage price index for construction workers increased 4.1% over the year to March 2024, the largest 12 month increase in a decade.

International

A report by the International Energy Agency (IEA) projects energy demand through to 2040 based on stated policy scenarios.

Whilst Renewables are the standout with 102% growth forecast, it is interesting to note the growth in all energy forms, with the exception of coal, for a cumulative 16% overall growth projection.

Prospects for Australian coal mines are more nuanced as the distinction between energy coal (Thermal) needs to be distinguished from (Metallurgical) coal used in steelmaking.

Rather than the Australian political narrative that promotes one form of energy development over another, the IEA analysis suggests multiple energy forms to be developed concurrently.

This implications of not doing so have recently been brought into focus with a major Australian manufacturer highlighting that their US gas prices are a third of their Australian operation’s costs whilst electricity in the US is half of the price paid in Australia.

The underlying theme for Australian equipment manufacturers is that medium term demand from the energy sector should remain strong though the mix of projects may vary.