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    Weakening non-residential construction forecast

    Australian Constructors Association

    A recent industry survey is forecasting a decline in total non-residential construction work through the 2014 and 2015 calendar years.

    According to the latest Australian Industry Group/ Australian Constructors Association Construction Outlook survey of Australia’s leading construction companies, the decline is expected to be driven by falls in resource related construction as mining investment winds back from peak levels. However, this downturn will be balanced somewhat by continued growth in telecommunications investment, firmer commercial construction activity and a pick-up during 2015 in transport infrastructure construction.

    According to the survey, after the 7.1% p.a. growth in 2013 (current prices), the total value of engineering and commercial construction work is expected to fall by 3.6% p.a. in 2014, followed by a slower decline of 1.8% p.a. in 2015.

    Total employment is also expected to decline through to mid-2015 in response to the weakening in resources and total infrastructure project activity.

    While the downturn in engineering construction is in response to reduced work levels in various key project areas, the total value of work will remain relatively high due to a still sizable engineering pipeline and a number of long dated projects. Within the engineering sector, mining related construction is expected to weaken through 2014 and 2015.

    Notable declines are also forecast in other civil projects (such as ports and terminals) and heavy industrial resource based projects, including oil and gas processing, which is set to peak in 2014 before starting a downturn in 2015.

    After struggling in recent years, the commercial construction sector is forecast to gain some momentum over the next two years. With more projects starting to receive the go ahead, the total value of commercial work is forecast to recover from a 1.8% p.a. decline in 2013 to increase by 4.1% p.a. in 2014 and a further 3.5% p.a. in 2015.

    Total infrastructure construction is expected to decline by 4.6% p.a. reflecting a drop in transport construction of 3.8% p.a. due to the completion of some major projects and the winding down of flood reconstruction work in Queensland. Falls are also expected in sewerage, drainage and water supply projects (-11.1% p.a.) while the close links of ports/terminal construction to resource investment is reflected in a 9.7% p.a. decline in revenue from other civil projects.

    The full report can be accessed on the Australian Industry Group website.

    Australian Constructors Association is the peak industry body representing Australia’s major construction contractors.

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