Media Release
28 September 2010
BUILDER SENTIMENT TAKES A DIVE
Statement by Peter Jones, Chief Economist
Builder sentiment fell back in the September
quarter
corresponding with declining
expectations for
building industry activity
and raising concerns over future economic and employment prospects,
according to Master
Builders Australia
on the release of its latest National Survey of Building and
Construction.
Master Builders Australia Chief Economist, Peter Jones, said: Builders are experiencing a renewed
sense of pessimism after the recent pick up in sentiment following the
collapse of confidence that
occurred in the wake of the global financial crisis and economic downturn.
Mr Jones said, Builders are becoming increasingly concerned about the outlook as government
stimulus programs begin to wind down.
Master Builders latest September quarter survey finds that builders expect overall industry activity to
be lower over the next six months relative to the past six months; they are much more circumspect
about their own future business activity; see their profits deteriorating over the next six months in line
with a range of forward indicators; and expect to reduce their workforce in the period ahead
A number of forward indicators headed south
during the quarter.
The index for display centre
traffic/enquiries fell back again in the September quarter which does not auger well for future sales
and activity levels. Builders backlog of work fell back in the September quarter, with the weakening
almost certainly in line with the tailing back of government stimulus work.
Mr Jones said, Builders have now become pessimistic about where the residential sector is headed
and
the index measuring non-residential building has fallen
back to be now well below the
satisfactory mark after a welcome boost from government stimulus programs such as the BER.
The latest survey shows weaker employment intentions in the September quarter, with businesses
now likely to cut back on employees and sub-contractors over the next six months.
He said, Financial constraints remain an issue for commercial and residential builders alike.
Although down from recent highs, nearly one quarter of respondents surveyed remain concerned that
availability of finance is having a large or constraining effect on their business. In addition, builders
report that interest rates are impacting on forward orders and believe that rates will continue to rise
over the next 12 months.
Mr Jones said, Based on the survey results, Master Builders urges the Reserve
Bank to keep
interest rates on hold until a private sector recovery in the building industry can regain momentum.
For further information contact: Peter Jones, Chief Economist, Mobile 0403 440 838