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MAJOR INFRASTRUCTURE PROJECTS TO DRIVE ENGINEERING CONSTRUCTION

15-06-2016
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Strong growth from transport-related infrastructure projects will help drive gradual improvement in the construction sector into 2017, a survey has found.

The latest Australian Industry Group/Australian Constructors Association Construction Outlook survey forecasts that the value of turnover from major non-residential project work is expected to edge lower in 2016 (-0.4%) before recovering some ground with a 4.5% rise in 2017.

This follows a sharp 8 percent drop in 2015.

The survey of the nation’s leading construction companies identifies a much-needed improvement in turnover next year supported by a broader base of activity as the infrastructure and commercial sectors recover and apartment building maintains growth.

A bigger pipeline of infrastructure activity is set to drive a 5.5% lift in engineering construction in 2017 after falling again in 2016 (-2.9%). This will be underpinned by strong investment in urban transport infrastructure with the survey pointing to solid rises in revenue from both road (+11.7%) and rail projects (+14.8%) in 2017.  

The survey also anticipates a further decline in resources-related engineering construction in 2017. However, it indicates that the drag from reduced mining investment is likely to wane with slower falls in turnover derived from mining and heavy industrial construction projects during the year.

Across the other major sectors – multi-level apartment development is expected to continue to grow strongly in 2016 (+10.8%), before easing in 2017 (+1.5%) due to slowing apartment approvals and price growth, and possible excess supply in selected capital city locations.

Commercial construction (including offices and retail building) is expected to strengthen modestly from a forecast 1.0% rise in 2016 followed by a 4.0% lift in 2017. Private sector building work will be the main driver of growth in both years.

Australian Industry Group Chief Executive, Innes Willox, said: “The rebalancing of the construction sector is set to continue through the remainder of 2016 and into 2017 with very strong growth from transport-related infrastructure projects expected to gradually offset the further declines in resource-related work. An easing of apartment-building from current very high levels is expected to be offset somewhat by an anticipated lift in commercial construction.  It is vital that workplace relations arrangements in the sector not only assist in containing costs but also have sufficient flexibility to allow the sector to expand as smoothly as possible.”

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