Construction sector set to bounce back

The value of major construction work across the country is expected to rise sharply over the next two years, according to the latest Australian Industry Group/Australian Constructors Association survey.

Following a drop by 2.1 per cent in the year to July 2017, the total value of construction projects is expected to climb by 7.1 per cent this financial year, with a further increase of 6.8 per cent forecasted for the following year.

A key driver of activity is non-mining infrastructure work, following significant growth in spending on transport infrastructure projects.

"Rising momentum in new road and rail projects, together with telecommunications infrastructure including the NBN, will also support a strong upswing in the value of engineering construction, which is expected to rise by eight per cent in 2017-18 and a further 10.6 per cent in 2018-19”, says Australian Industry Group Chief Executive, Innes Willox.

Australian Constructors Association (ACA) Executive Director, Lindsay Le Compte says the forecast comes as great news to the industry, as it means the creation of more jobs as a result.

“It will support the development and implementation of plans for sustainable industry skills development and job creation, as well as pave the way for more innovative approaches to procurement and project delivery processes to achieve better infrastructure outcomes for the community,” she says.

In other survey findings, a strong pipeline of work is expected over the next two years in commercial construction (including offices, retail buildings and industrial premises) with an upswing of 1.8 per cent in the next year, and a further 9.4 per cent the following year.

Total employment in major construction recovered by 3.1 per cent in the year to July 2017, following a decline of 2.7 per cent in the previous 12-month period.

Multi-level apartment construction will pick up by 18.9 per cent, however the upturn is not expected to last with conditions expected to slow the following year.

Mining projects will continue to fall, albeit at a slower rate than previous years. Businesses are also reporting worsening labour shortages; with 63.6 per cent of respondents reporting either 'major' or 'moderate' difficulty in recruiting skilled labour in the six months to September 2017.

Sourcing of sub-contractors is also proving to be an issue, with the proportion experiencing 'major' or 'moderate' difficulty increasing to 50 per cent in the six months to September 2017, up from 39.2 per cent in the previous period. Rising labour costs will also continue to put pressure on the industry.

About 45 per cent of survey respondents expressed major or moderate concern over the sourcing of building materials.

Read the full report here