The 12-year boom in engineering works stretching back to 2001 has come to an abrupt halt, according to business research specialist BIS Shrapnel.

The Engineering Construction in Australia 2012/13 – 2026/27 report found that while civil work done is expected to rise 11 per cent over 2012/13 to $128 billion, aggregate activity is expected to slip by as much as 5.4 per cent in 2013/14 – marking the first decline since 2000/01.

Perhaps more alarmingly, 2016/17 activity is expected to be about 20 per cent below the 2012/13 peak.

But it’s not all doom and gloom says Adrian Hart, Senior Manager for BIS Shrapnnel’s Infrastructure and Mining unit. The construction pipeline is still providing a steady source of income for the nation’s engineers.

“The good news is that a sharp collapse in engineering construction activity at the national level, while still a risk, is unlikely in the near term,” Mr Hart said.

“The value of work commenced – but yet to be completed – is still a very healthy $123 billion which will support activity over the next 12-18 months. But avoiding a more serious shakeout after the middle of the decade is the key challenge. This will require the next round of projects to come through from both the public and private sector.”

According to BIS Shrapnel’s longer term projections, civil construction activity is not expected to regain 2012/13 peak levels until at least the mid-2020s. The key driver of the downturn is declining investment in mining projects and related infrastructure, although large LNG construction projects in Queensland, Western Australia and the Northern Territory will help keep aggregate activity very high over the next few years. Constrained public investment, even when accounting for the National Broadband Network, is also acting as a drag on activity.

The negative growth outlook for the engineering construction market means that future Australian economic growth, demand and employment now hinges on a recovery in housing and non-resources investment by businesses and governments.

The full report can be found here