The Australian Construction Industry Forum (ACIF) published their industry forecast last November. WeBuild is pleased to present a summary of the forecast and hope that readers will find it informative and useful.

ACIF forecast highlights

ACIF is forecasting a recovery in Non-Residential Building  activity, including offices, retail and industrial building. This reflects an expected greater demand for construction projects that support the “underlying transition of the economy and employment towards provision of services (including tourism, accommodation, education, health and aged care)”. New infrastructure projects of roads, rail and water are also showing signs of growth. The ACIF expects that the upturn in this sector will compensate for the falls in mining and commodity export infrastructure and the slowdown in Residential Building activity.

Graph ACIF November 2017 Forecasts

Work Done in Building and Construction

The value of all work done in the building and construction industries dropped by 4% last year to $218 billion. The ACIF expects that total building and construction work will continue to fall over the next three years but that the decline will slow down gradually, leaving the level of total work completed at $203 billion by 2019-2020.

Residential Building

New Other Residential dwellings (such as apartments and townhouses) fell last year from exceptional highs not witnessed for some years, particularly in Queensland, New South Wales and Victoria. All types of Residential Building are anticipated to decline during the next two to three years. This will reduce the value of work down from $96 billion in 2016-2017 to $84 billion by 2019-2020.

Non-Residential Building

Non-Residential Building activity is growing in the states less exposed to an economic slowdown after the end of the mining boom. Non-Residential Building activity is expected to grow over the next three years, climbing from $36 billion in 2016-2017 to $39 billion in 2019-2020.

Engineering Construction

Engineering Construction dropped by 10% last year to $85 billion. An upturn in capital expenditure on infrastructure investments (such as Roads and Bridges, Railways and HarboursWater and Sewerage, Electricity and Pipelines) is expected to increase and then level out at around $80 billion over the next three years.

Australian States – “The two speed economy”

There were significant differences between the “performance and outlook of the building and construction industries” in the Australian states and territories. The “mining states” of Queensland, Western Australia and the Northern Territory counted for 88% of the fall in building and construction activity forecast for the 2017-2018 year. In the meantime, the other states are expected to maintain the same level of building and construction activity during the same period, due mainly to the increase in expenditure on infrastructure projects and the upsurge in Non-Residential Building activity. This will counterbalance the anticipated downturn in Residential Building activity.

Construction Industry Employment

There was a notable increase in construction industry employment in Australia during the last few years, caused by the surge in Residential Building. Construction employment rose to 1,111,000 jobs at the end of 2016-2017.

The ACIF expects a decline in the level of construction employment. The expected recovery in Non-Residential Building activity and improvements in Infrastructure spending will only partially offset the decline in employment in Residential Building. Employment in building and construction is projected to fall to 1,041,000 jobs by 2020-21.

ACIF Forecasts

“As an industry not-for-profit, ACIF produces this information to assist businesses and governments at all three levels navigate the rapidly changing marketplace and help them plan for the future. Find out more at www.acif.com.au/forecasts.”