Resources sector to lead engineering boom
Resource-related construction demand is tipped to significantly boost the engineering and commercial construction sectors over the next two years, according to findings published by the Australian Industry Group.
The Australian Industry Group/Australian Constructors Association Outlook Survey anticipates that after lifting 6.3% in 2010/11 (current prices), the total value of engineering and commercial construction work will expand by 10.3% in 2011/12 before lifting a further 12.0% the following year.
AI anticipates that growth will be largely fuelled by significant mining investments and the increasingly strong pipelines of heavy industry projects, including oil and gas processing.
Other civil mining-related projects, such as port upgrades, as well as infrastructure projects including expanding roads and railways, will also contribute to the rise in activity.
The key findings of the report are:
- Australia's leading construction companies anticipate strong growth, largely driven by the resources sector, during the 2011/12 and 2012/13 financial years.
- The latest Australian Industry Group/Australian Constructors Association Outlook survey predicts that after rising 6.3% in 2010/11 (current prices) the total value of non-residential construction work will rise 10.3% in 2011/12 before lifting a further 12.0% in 2012/13.
- Engineering construction will experience the strongest growth with a lift of 13.0% in 2011/12 and 14.2 in 2012/13.
- Resource-related projects will largely drive engineering growth projects with solid support also coming from transport infrastructure, telecommunications and electrical power generation and supply.
- Commercial construction will continue to lag engineering construction, with the sector expected to lift 2.4% in 2011/12 before gaining some more momentum with a lift of 6.2% in 2012/13.
- Apartment construction is expected to remain lacklustre - dropping -1.2% in 2011/12 before lifting 4.8% in 2012/13.
- Supply construction and input cost pressures remain and are expected to intensify: 68.8% of businesses reported major or moderate difficulty recruiting qualified labour in the six months to September, while 48.4% reported the same level of difficulty when it came to sourcing building materials.
- 74.2% of companies expect moderate to major difficulty when recruiting skilled labour over the next six months.
- Companies are reporting significant rises in input costs with 65.7% citing moderate or major lifts in direct labour costs in the six months to September 2011.
- Total employment is expected to lift 9.1% in 2011/12.
The full report can be found here