Construction set for growth over next two years

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Construction site The Construction Outlook survey showed positive growth for the industry over the next two years Construction site

The outlook for Australia’s construction industry over the next two years looks bright, according to the latest Construction Outlook survey.

The survey is conducted jointly by the Australian Industry Group and the Australian Constructors Association and collects data from 100 construction companies around the nation, representing approximately 30 percent of the total industry.

The report has highlighted a number of transport infrastructure projects that will drive a lift in major construction project work over the 2016-17 and 2017-18 financial years. It also projects a gradual rise in commercial construction over the next two years (+3.5 percent in 2016-17 and + 5.2 percent in 2017-18) and solid levels of multi-level apartment construction (+14 percent in 16-17 and +3.1 percent in 17-18).

"With the impacts of the wind-down of mining and energy-related investment now waning, the construction sector looks set for a modest expansion over the current financial year and into 2017-18," Ai Group chief executive Innes Willox says.

"This is driven by a healthy pipeline of transport projects and civil works and supported by a gentle rise in momentum in the commercial construction segment of the industry. 

"While still at high levels, the pace of growth in the multi-level apartment segment of the industry is clearly anticipated to ease in 2016-17 and fall more sharply in the following year," Willox says.

Engineering construction is expected to rise by 3.6 percent through the year after falling sharply by 15 percent in 2015-16. Strong growth in road (+17.9 percent) and rail (+16.1 percent) projects underpins a 13.5 percent rise in infrastructure-related engineering work, a result of the many government transport projects underway or in the pipeline.

The report also expresses concerns over the apparent return of labour shortages, with 40 percent of respondents reporting either ‘major’ or ‘moderate’ difficulty in recruiting skilled labour.

The rising cost of that labour as well as materials is also an area of concern for respondents. Labour costs are expected to continue to rise as projects move from the planning phase to the construction phase and contractors are increasingly competing for the same pool of skilled labour.

 

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