Builder Sentiment Falls As Rates Bite

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8th April 2008, 01:56pm - Views: 468

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Media Release


April 2008 

Builder Sentiment Falls as Rates Bite

Builders are becoming increasingly concerned about the outlook for the economy, the building industry and their

own businesses, according to the latest Master Builders Australia National Survey of Building and Construction.

Master Builders Australia Chief Economist, Peter Jones, said: “We have seen a fall in builder sentiment in the

March quarter in the wake of higher interest rates and uncertainty on world financial markets.” 

In another notable change in sentiment, builders are becoming less optimistic about industrial relations and see it

as an increasing constraint on future activity compared to the dramatic improvement experienced in the wake of

industry reforms including the establishment of the Australian Building and Construction Commission.  

Mr Jones said, “It is not surprising that most survey indicators fell back in the March quarter as builders felt the

effects of interest rates on forward orders and are expecting further rate rises in the next 12 months.”

“There was a sharp decline in expectations for business conditions nationally, a finding compounded at the industry

level by a decline in expectations for activity in the building and construction sector over the next six months. 

“The industry is pessimistic about prospects for improvement in residential activity and builders with substantial

operations in both residential and non-residential sectors revealed weaker expectations for future activity in the

commercial sector,” said Mr Jones.

“There was a sharp dip in the index measuring builders’ expectations for own business activity over the next six

months. Builders’ were also concerned about future profits, and there was a fall in stated intention to invest in plant

and equipment.

“Other survey results, such as a fall in enquiries and a reduced backlog of work on builders’ books, add to a picture

of clouds gathering on the horizon”, said Mr Jones.

“The latest Master Builders Survey results suggest that the Reserve Bank would be wise to put monetary policy on

hold”, Mr Jones concluded.

For further information contact:

Peter Jones, Chief Economist (02) 6202 8888, Mobile: 0403 440 838

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