Construction declines as engineering falls
01 September 2008
Statement by Mr Peter Jones, Chief Economist
Construction work done declined in the June quarter as engineering work fell back alongside continued weakness in residential and non-residential building, according to Master Builders Australia, the peak body for the building and construction industry.
Mr Peter Jones MBT’s Chief Economist said, “The fall in engineering is probably due more to timing related to some large projects rather than early warning of any sustained downturn. The outlook for engineering remains bright, with State Governments upping their spending on infrastructure and a massive pipeline of resources-related work yet to be done.”
“The latest results from the ABS are in line with Master Builders latest June quarter national survey which revealed a turn for the worse in builder sentiment in the wake of tighter financial conditions and high petrol prices.
Mr Jones said, “Unless interest rate relief comes quickly there is a danger that business sentiment will continue to deteriorate, with implications for the non-residential building sector which to date has only suffered a moderation in growth.
“A weak albeit positive increase in residential building in the June quarter masks a flat trend that is set to continue as the full impact of earlier interest rate rises take effect.”
He said, “Even if rates begin to come down from as early as next month, a housing recovery is not likely to gain any momentum until well into 2009, compounding the severe underbuilding and chronic shortage of rental stock.”
“The construction industry is a bell-weather for the Australian economy with a sustained upturn in residential building needed to offset any prolonged weakening in non-residential construction.”
Seasonally adjusted, the chain volume of construction work done in the June quarter 2008 fell by 2.6 per cent to $30.1 billion to be 5.9 per cent above levels in June quarter 2007.
The chain volume of seasonally adjusted building work done in the June quarter was up 0.2 per cent to $16.8 billion, to be up 4.1 per cent on the previous June quarter.
• Work done on residential building rose by 0.2 per cent to $9.9 billion, to be up 1.7 per cent on the corresponding figure a year earlier.
• Non-residential building rose by a seasonally adjusted 0.3 per cent to $6.9 billion, and is up 7.6 per cent on the previous year’s level.
Engineering construction work done fell by a seasonally adjusted 6.0 per cent to $13.3 billion but was 8.2 per cent above the previous June quarter level.
Further information contact: Peter Jones, Chief Economist (02) 6202 8888 Mob. 0403 440 838
