ACIF Forecasts – May 2021
The Australian Construction Industry Forum (ACIF) has released its Construction Industry Forecast for May 2021. We have published a summary here. ACA members have free access to the full forecasts, available on the ACIF Customised Forecasts Dashboard.
Construction Industry Bounces Back
The May 2021 ACIF Forecasts reveal that the Australian building and construction market is bouncing back. Growth is exceeding expectations based on Australia’s ability to bring the spread of COVID-19 under control and the deployment of a comprehensive range of policy measures designed provide a strong stimulus and a rapid recovery. The new forecasts project growth of 2.7%, bringing the level of building and construction work up to $243 billion in 2021.
The building of new houses is entering into boom territory with 10% growth this year. The upswing is driven by a surge in house demand supported by record low interest rates, provision of significant government support programs including HomeBuilder, and an improving outlook for sustained employment growth.
Kerry Barwise, ACIF’s Chief Forecaster from FTI Consulting, stated “The building and construction industries did better than expected in dealing with the disruptions of 2020. The forecasts predict an even stronger outcome ahead in 2021. The industry is punching above its weight in the recovery.”
Infrastructure spending in areas including electricity supply, water and railways are expected to benefit from enlarged infrastructure delivery programs being rolled out by Commonwealth and State governments. Government spending and investment providing social infrastructure and other essential services has been ramped up, increasing work forecasts in ad hoc categories of building, including Other Commercial and Miscellaneous, as well as in Health and Aged Care.
While the outlook for building and construction is much stronger than generally expected, the recovery remains uneven as the pandemic continues to weigh on some industry sectors and regions. Some parts of building and construction will experience remarkable growth this year, while others are expected to see contraction and decline.
The immediate outlook for sub-sectors which have been most directly affected by lingering disruption from the pandemic and lockdowns is not so bright. Sectors that are still impacted by closed borders and other factors include Accommodation, Recreation and Other, including stadiums and other large scale facilities.
Building and Construction Employment
Employment in building and construction activities fell by 2.6% to 1,152,000 jobs by the end of 2020 according to ABS employment statistics. Construction employment accounted for a little under 10% of total employment across the Australian economy.
COVID-19, the lockdowns and an underlying downtrend in activity levels, especially in Residential Building activity, drove the contraction in employment in 2020. The strong rebound in Residential Building and growth in Engineering Construction activity are already driving a recovery in employment and this is expected to push job numbers up to 1.2 million in 2021. The continued uplift in infrastructure spending will sustain growth in job numbers into 2023.
ACIF Forecasts are rolling ten-year forecasts of demand across residential, non-residential and engineering construction in Australia. The Forecasts are prepared by respected economic modellers, using high quality data sources, and are overseen by ACIF’s Construction Forecasting Council, an industry panel of expert analysts and researchers.
ACIF Forecasts are used by thousands of professionals each year, from across the full range of stakeholders, from major organisations to small consultancies. The ACIF Forecasts are available in two formats: Australian Construction Market Report, a 110-page expert analysis on the economy and industry sectors ($350), plus the Customised Forecasts Dashboard ($300), an online portal where users can query the full ACIF Forecasts database on 20 work types, over a 20-year period. 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.
ACA members have free access to the ACIF Dashboard. You can sign up here.