MBA: Construction strength set to fade

Master Builders Australia (MBA) announced the increase of construction work done in the December quarter but said the strong growth phase that has been experienced by the industry over the past five years is set to change.

MBA's Chief Economist Peter Jones said, "The key to the outlook for the construction industry over the next two years will be whether an upswing in the residential sector can offset looming weakness in non-residential building and engineering activity as the previously strong pipeline of work begins to fell away."

"Despite a strong result in the December quarter, the outlook for engineering construction will begin to turn in line with the fall in commodity prices, although a massive pipeline of resources-related work yet to be done and State Government infrastructure spending should cushion the fall," he said.

"Funding issues continue to threaten commercial building projects with softening market conditions to leave a significant hole in building activity," Mr Jones said.

Seasonally adjusted, the chain volume of construction work done in the December quarter 2008 rose by 1.7 per cent to $35.4 billion to be 13.0 per cent above levels in December quarter 2007. The chain volume of building work done in the December quarter was unchanged at $18.2 billion, to be up 3.9 per cent on the previous December quarter.

Work done on residential building fell by 1.0 per cent to $10.4 billion, to be up 2.9 per cent on the corresponding figure a year earlier. Non-residential building rose by 1.3 per cent to $7.6 billion, and is up 5.3 per cent on the previous year's level. Engineering construction work done rose by 3.6 per cent to $17.3 billion to be up 24.3 per cent above the previous December quarter level.

26 February, 2009


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