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Construction strength begins to fade

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Construction work done, fell in the March quarter as the effects of the global financial crisis began to show through, according to Master Builders Australia.

  

Chief economist Peter Jones said, The latest figures confirm the findings of Master Builders national survey, indicating that there will be substantial fallout from the global financial crisis on the building and construction industry. Government stimulus measures will help cushion the blow, but they will not be enough to prevent a major downturn in construction over the next 12 months.
Commercial builders are being choked by tough lending criteria imposed by financial institutions and funding issues and softening market conditions will leave a significant hole in activity. Residential building is experiencing another ratchet down in activity, but will recover late this year and into next as lower interest rates, the first home owner boost, and social housing initiatives help drive an upturn. Confidence is the missing link. Once the economic situation has stabilised, a housing upswing will gather momentum.
Engineering construction fell back in the March quarter but a massive pipeline of resources-related work is yet to be done and state government infrastructure spending should cushion the fall. The key to the outlook for the construction industry over the next two years will be whether an upswing in the residential sector can offset weakness in non-residential building and engineering activity as the previously strong pipeline of work begins to fell away.
Seasonally adjusted, the volume of construction work done in the March quarter fell by 3.7% to $34.5bn to be 3.5% above levels in March quarter 2008. The volume of building work done in the March quarter was down by 4.4% to $17.4bn, to be down 2.1% on the previous March quarter.
Work done on residential building fell by 6% to $9.9bn, to be down 4.6% on the corresponding figure a year earlier. Non-residential building fell by 2.1% to $7.6bn, and is up 1.3% on the previous years level. Engineering construction work done fell by 3% to $17bn to be up 10.1% on the previous March quarter level.


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