Research & Analysis

ACIF report shows strong growth overall in construction work activity

The latest industry forecasts foreshadow that building and construction work activity in 2017-18 has grown to $247 billion, which is a level of activity that’s getting close to rivalling the peak achieved at the height of the mining boom, according to the latest Australian Construction Industry Forum (ACIF) Forecasts.

Building and construction activity now accounts for 14 per cent of GDP and construction sector jobs account for nearly 10 per cent of total employment, which equates to around 1.2 million jobs this year.

According to Bob Richardson, chair of ACIF’s Construction Forecasting Council, 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,” Richardson said.

“Meanwhile, construction work in heavy industry, including mining, will return to an underlying downtrend over the next two years.”

Employment grew in the sector by 4.2 per cent last year, while the value of work done (or spending) grew by 9.8 per cent. 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,” said Kerry Barwise, ACIF head forecaster.

“The decrease in employment of 1.6 per cent in 2018-19 is larger than the expected reduction in total work done that is projected for that year of 1.2 per cent, 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.”

The November 2018 Australian Construction Market Report includes easily accessed commentary, graphs and charts covering actual data and forecast changes in building and construction activity nationally and by states over a rolling 10-year period.

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