Surprising resilience of building and construction underpinned by infrastructure spending
31 May 2024
AMCA members receive complimentary access to ACIF's forecasts for May 2024, which have upgraded the outlook across the building and construction industry.
[MEMBERS ONLY]
>> Download the Australian Construction Market Report - May 2024 <<
Access to these products is a benefit of AMCA membership – please do not share them outside your companies.
The boom in Engineering Construction, particularly Infrastructure Construction activities, has offset the decline in Residential Building, and underpinned a surprisingly positive outlook for the building and construction industry. This is the major theme of the Australian Construction Market Report (May 2024) published by the Australian Construction Industry Forum (ACIF).
The drivers of last year’s growth will carry over into a more robust
growth of 5% in 2023-24. This is projected to raise work in the building
and construction industry to $298 billion. There is sufficient momentum
to drive further growth for a few more years, albeit at a less rapid
pace. This will push work done by the industry to equal or exceed $300
billion over the next three years.
This optimistic outlook may come as a surprise to some. The industry has
been grappling with a difficult economic environment. Rising inflation
and high interest rates have placed a heavy burden on builders’
shoulders. Builders are also having to confront the impact of recent
industrial relations changes at the same time as they are dealing with
sustained labour shortages. While a sharp spike in inflation in
materials prices has moderated, prices remain at elevated levels.
While there are areas that are struggling, there are also categories of
building and construction activity where the industry still has a large
backlog or pipeline of work in hand. While governments are trimming
their spending -- cutting and deferring projects -- they are mid-way
through many large-scale public infrastructure projects and programs
that still have some way to go, sustaining work well into this year and
next. Structural and policy change driving the transition to clean
energy is already boosting construction work and more is on the way.
Of course, there are many risks that could still upset these forecasts.
Fiscal policy and monetary policy settings are pulling in opposite
directions and major adjustments may be required. The next resources
surge may not play out as expected. Not all of the risk is on the
downside. Government initiatives to combat the housing crisis could
mobilise a larger increase in housing supply and this may arrive sooner
than expected in these forecasts.
Offsetting the decline in Residential Building, Engineering Construction -- particularly Infrastructure Construction activities -- have boomed. This
has been supported via a raft of large-scale public transport projects,
and a tsunami wave of interest and project proposals in renewable or
clean energy supply. The ramp up in work yet to be done has been very
large over the last year and there is still upside risk to the 10%
growth forecast for 2023-24.
Non-Residential Building activity grew steadily over the last two years
and has reached an historic high point. Growth in Non-Residential
Building has offset some of the decline in Residential Building. The
situation for this category reflects large movements in the
sub-components, with strong growth (sometimes double-digit growth) in
Education, Industrial, and retail being offset by large contractions in
Accommodation and Entertainment and Recreation. While still reflecting
mixed performance in the subcomponents, continued overall growth is
expected for the next two years, although this will taper off down to
1.2% by 2025-26.
Free access for AMCA members
AMCA members receive complimentary access to ACIF's Member Forecasts
Program, which has two components:
Access to these products is a benefit of AMCA membership – please do not
share them outside your companies.
>> Download the Australian Construction Market Report - May 2024 <<
>> Access the ACIF Customised Forecasts Dashboard <<
To access the dashboard:
Learn more at
https://www.acif.com.au/forecasts/forecasts.
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