Recovery ahead, say construction companies

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Australian construction companies are forecasting a recovery in engineering and non-residential building activity for the remainder of 2017 and in 2018, the Australian Industry Group reports.

The latest Australian Industry Group/Australian Constructors Association Construction Outlook survey released today shows that turnover value is expected to rise by 4.3 per cent by the end of the year, followed by a 6.4 percent spike next year, reversing a three-year decline in major project work.

This resurgence is on the back of an upturn in non-mining infrastructure construction, according to the survey, highlighted by a 2.9 per cent value increase in engineering construction this year with a forecasted 6.8 per cent next year.

These increases come off the back of a disastrous 2016 which saw a downturn in the engineering sector of 16.5 per cent.

The multi-level apartments sector is also expected to rise again this year and next, on top of a fruitful 2016. The predicted 2017 rise of 22.9 percent follows on from last year’s 15.5 percent increase but is set to drop next year to a modest 6.8 per cent as the current apartment building cycle reaches its peak.

Despite these rises, the resource-related sectors such as oil and gas are set for further heavy declines, the survey suggests a 25.5 per cent drop this year and a further 56.8 per cent by 2018.

"The overall pick-up in major project work in the construction sector confirms we are leaving behind the extended period during which the industry, and indeed the national economy, was dominated by the wind-down of the historic boom in mining and energy-related projects," Australian Industry Group (ai Group) chief executive Innes Willox says.

"While apartment building continues to feature prominently, it is clearly set to scale back in the period ahead.

"In place of mining-related work and apartment building, over the rest of 2017 and into 2018 the construction sector is anticipating further expansion in infrastructure investment, particularly in road and rail works, and a lift in private sector commercial construction," he adds.

While the drag from other mining-related construction will slow in 2017 (-14.3 percent), not all is lost as a predicted return in 2018 is set to record a mild growth of 3.1 percent.

The survey covered the responses of 100 companies employing approximately 50,000 persons with combined turnover of $21 billion.

Click below for full report: 

Construction Outlook Survey - June 2017


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