ACIF Industry Leaders Forecast Strong Overall Growth in Building and Construction Work Activity


19 November 2018

ACIF: The latest industry forecasts foreshadow that building and construction work activity in 2017-18 has grown to $247 billion. This level of activity is getting close to rivalling the peak achieved at the height of the mining boom. Building and construction activity now accounts for 14% of GDP and construction sector jobs account for nearly 10% of total employment.

“The outlook for the next few years is finely balanced. We expect the roll out of major infrastructure projects in railways, roads, electricity, water and sewerage to continue. Meanwhile, construction work in heavy industry including mining will return to an underlying down-trend over the next two years” said Bob Richardson, Chair of ACIF’s Construction Forecasting Council, which oversees the production of the ACIF Forecasts.

Residential Building

Residential Building is weakening. Building activity dipped by 0.5% last year (2017-18) bringing the value of work done to $101 billion. Completing the work that is already in the construction pipeline may support dwelling completions at current levels over the remainder of this year, but the significant loss in demand reflected in falling house prices has already forced the supply side to adjust its plans and Residential Building activity will experience a deeper decline in 2019-20 and 2010-21.

Non-Residential Building

Activity Non-Residential Building activity is expected to grow again next year, although the rate of growth is expected to moderate from 10% to 3%. This is being driven by an ongoing increase in non-mining business investment. Growth hot spots are in accommodation, offices and other commercial. Increased government consumption and public investment in service activity such as in health, community services and in education is also supporting growth in Non-Residential Building next year.

Building and Construction Employment

Building and construction work is expected to provide 1.2 million jobs this year. This accounts for around 10% of total employment in Australia.

Employment grew in the sector by 4.2% last year while the value of work done (or spending) grew by 9.8%. The divergence in changes in construction employment and spending can be explained by differences in the labour intensity of building and construction activity. Much of the increase in work done last year was in Engineering Construction which is typically capital intensive (and import intensive) and increases in this type of spending do not drive similarly sized increases in construction employment.

If construction activity is largely expected to track “sideways” into the medium term, why do the ACIF November 2018 forecasts project dip in construction employment deepening in 2019-20? The decrease in employment of 1.6% in 201819 is larger than the expected reduction in total work done that is projected for that year (of 1.2%) because the increases in employment due to higher spending in infrastructure will not fully offset the decreases in employment due to the forecast contraction in labour intensive Residential Building activity.

Unemployment and Wages Growth

Moderate economic growth is expected to generate sufficient employment growth to gradually erode the pool of unemployment (and underemployment) and this is expected to provide just enough wages growth to keep inflation within the RBA’s targeted band over the medium term.




Source:  Australian Construction Industry Forum -

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