Media Release
9 July 2008
CONSTRUCTION SENTIMENT FALLS AWAY
CREDIT SQUEEZE AND FUEL BITE
Statement by Peter Jones, Chief Economist
Construction industry hopes have suffered a blow, with Master Builders Australia’s National Survey
of Building and Construction revealing the fourth consecutive fall in builder sentiment in the June
quarter.
The Master Builders Building and Construction Index has fallen below 50 for the first time in four
years, indicating that builders now expect a decline in building and construction activity.
Master Builders Australia Chief Economist, Peter Jones, said: “This survey is a finger on the pulse
of the industry. What builders tell us through the survey has historically been a good indication of
what lies ahead, and in this case, the future isn’t looking rosy.”
“It is clear that tight financial conditions coupled with higher petrol prices are taking their toll. Along
with the expected drop in building activity in the next six months, builders are anticipating a
weakening in profitability which doesn’t auger well for investment and employment,” said Mr Jones.
“The impact of interest rates on new contracts and forward orders has increased sharply in the
past two quarters. This is being exacerbated by rising input costs, with an overwhelming majority of
builders now expecting labour and materials costs to escalate significantly in the next six months.
“Builders are reporting a weakening in non-residential construction activity, a trend they anticipate
will continue despite plans for massive investment in social and economic infrastructure revealed in
this year’s Federal Budget,” said Mr Jones.
“Builders see little prospect of any immediate recovery in the housing sector. More than 50 per
cent of respondents have major concerns about housing affordability and more than 70 per cent
believe housing affordability will deteriorate further in the coming year.”
“Survey respondents have also indicated that the likely number of employees and subcontractors
they take on over the next six months will fall off sharply.
“This will challenge the industry’s ability to encourage uptake of apprentices, at a time when the
need to address skills shortages has never been more important. Builders say difficulties in finding
labour have worsened across the entire industry in the past 12 months, with project managers,
foremen and supervisors, and site managers particularly hard to come by,” said Mr Jones.
“The industry is clearly concerned about the state of the economy, the building sector and their
own business prospects.”
For further information contact:
Peter Jones, Chief Economist Work 02 6202 8888, Mobile 0403 440 838
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