Construction Boost From Engineering As Building Stalls

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28th May 2008, 03:28pm - Views: 513

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Media Release

28 May 2008



Statement by Mr Peter Jones, Chief Economist

Construction work done rose in the March quarter on the back of strong engineering work done that stands in

contrast to prolonged weakness in residential and a fall in non-residential building, according to Master

Builders Australia, the peak body for the building and construction industry.

Mr Peter Jones MBA’s Chief Economist said, “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


Mr Jones said, “A weak albeit positive seasonally adjusted increase in residential building in the March quarter

masks a negative trend that is set to deepen as the full impact of higher interest rates takes effect.” 

“A recovery is not likely to gain any momentum until well into 2009, when rates are likely to begin to shift

down.  Residential building has been flat to falling over the past four years and there is now a serious risk of a

further ratchet down in activity.  This would seriously compound the underbuilding some analysts put at 40,000

dwellings per annum, leading to a worsening of a chronic lack of rental stock, with implications for rent


“Despite a quarterly fall that reinforces recent moderation in growth, non-residential construction activity levels

should hold up provided business sentiment does not deteriorate markedly and profitability and therefore

investment stays strong.”

“Nonetheless, there remains a risk that construction growth will stall in the out-years unless there is a sustained

upturn in residential building to offset any prolonged weakening in non-residential construction.”

Seasonally adjusted, the chain volume of construction work done in the March quarter 2008 rose by

2.3 per

cent to $30.0 billion to be 3.3 per cent above levels in March quarter 2007.

The chain volume of seasonally adjusted building work done in the March quarter was flat, at $16.4 billion, to

be down 1.3 per cent on the previous March quarter.

Work done on residential building rose by 0.3 per cent to $9.7 billion, to be down 2.6 per cent on the

corresponding figure a year earlier.

Non-residential building fell by a seasonally adjusted 0.5 per cent to $6.7 billion, but is up 0.8 per cent

on the previous year’s level.

Engineering construction work done rose by a seasonally adjusted 5.2 per cent to $13.5 billion and was 9.5

per cent above the previous March quarter level.

Further information contact:

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

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