New building and construction industry forecasts released today chart the passing of two booms – in mining and residential – and the impact on this important sector of the Australian economy.
Australian Construction Industry Forum (ACIF) released the latest ACIF Forecasts, revealing how the sector is coping with another double digit fall in engineering construction plus the impending peak of residential building.
“The May 2016 ACIF Forecasts re-chart the course of building and construction industry as it surfs the downside of tsunami-sized waves of investment,” said Kerry Barwise, Chief Economist for ACIF.
“The building and construction industry is playing a key role in the transition of our economy away from resources towards a more diversified economy.
“The industry has ramped up residential building following the once in a lifetime mining boom, but that too is now coming to an end.”
The May 2016 ACIF Forecasts reveal a second consecutive 5% annual fall in aggregate activity, reducing 2015-16 total construction activity by $12 billion to $212 billion.
These forecasts have also ground $5-10 billion off the level of construction activity that was projected in each year over the next three years, largely reflecting a more stringent downgrade to the outlook in Engineering Construction following the mining boom and the expected dip in Residential Building. Residential builders are still working through an enlarged construction pipeline and building work is expected to top $91 billion in real terms in 2016-17 before falling.
However, despite the sweeping changes and challenges, this is not the time for doom and gloom. Irrespective of the passing of booms in two major construction sectors, these forecasts also identify areas of construction activity that will assist an economy in transition.
Wherever activity is in support of the shift towards the new economy, innovation, creativity and the provision of key services, Non-Residential Building work is growing especially in the areas of Health and Aged Care, Accommodation and Retail/Wholesale Trade.
These conflicting trends are projected to turn around the modest contraction forecast in Non-Residential Building activity for this year into a small uptick next year and more fulsome growth – close to 3% per annum – by 2017-18.
These forecasts have also taken into account a fundamental shift in the composition of Engineering Construction activity. Many of the largest new infrastructure projects are in areas that will enhance the delivery of key services and improve the mobility and liveability in Australia’s cities, enhancing their role as major drivers of economic growth.
“Australian Construction Industry Forum (ACIF) is proud to provide the construction industry with the May 2016 ACIF Forecasts,” said Adrian Harrington, Chair of ACIF’s Construction Forecasting Council.
“The building and construction sector contributes around 8% to GDP and is responsible for building the shelter and infrastructure for both our people and businesses that are the backbone of our economy. Our work facilitates the movement of people, goods and resources, fosters connectivity and communication, and allows the transmission of water and energy across this vast nation.
“With technology continuing to emerge at an unprecedented scale, our population growing and aging, and the economy transitioning from the biggest resources boom in over a century, it is more important now than ever before that the industry has a relevant and credible ‘compass’ for the next ten years. These Forecasts outline the upcoming demand for work across the three key sectors – residential and non-residential building plus engineering construction, and the 20 sub-sectors they include, as well as what is happening with construction costs and labour requirements.”
ACIF Forecasts are released 12 May 2016 at www.acif.com.au. ACIF Forecasts are available in two formats: Australian Construction Market Report, an 80+ page report with detailed commentary and analysis, and the Customised Forecasts Dashboard, an online portal where subscribers can tailor queries to suit their business type and location.