This current financial year could be the last year in which the substantial falls in mining related construction work eclipse all other developments within the non-residential building and construction industry according to Australian Construction Insights. Source: Timberbiz
Geordan Murray, Australian Construction Insights economist said: “the forecast decline in non-residential building and construction work in 2016/17 should see activity in the industry drop to around $127 billion marking the bottom of the mining investment dominated slowdown.
“Mining related activity may still decline further beyond 2016/17 however, the prospects for other parts of the construction industry are improving and growth in these sectors is expected to outweigh any further contraction in mining related work by that stage.
“Although the aggregate value of non-residential construction work declined by 10 per cent last financial year, there were green shoots of a recovery emerging from some non-mining parts of the industry: 11 of the 22 subsectors of the construction industry expanded in 2015/16.
“Progress on the NBN rollout has meant that the construction of telecommunications infrastructure was a big positive during the year, and so too was work on construction of road infrastructure. A large share of this work relates to the major transport infrastructure projects underway in NSW and Victoria, while work on infrastructure supporting residential subdivisions in the east coast housing markets also played a role.
“The pipeline of public sector infrastructure projects has benefited from growth in stamp duty revenue and resource royalties in the larger states. While public sector investment is never going to fully fill the void as mining construction continues to recede, it is set to play a bigger role in rebalancing the economy over the years ahead.
“The soft spot in the outlook is private sector investment, but the boost in public sector investment should foster more positive expectations amongst businesses and provide the foundation for a more significant uplift in private sector investment down the track.
“With lacklustre growth in non-mining business investment and the residential building cycle having reached a peak, the improved level of public sector investment could prove timely.”
