STRONG growth in engineering construction fuelled by the resources boom is expected to exacerbate skills shortages and increase construction costs over the next two years, the building and construction industry says.
The latest Australian Industry Group/Australian Constructor Association construction outlook survey showed the total value of engineering and commercial construction work across Australia was set to lift by 9.1 per cent over 2011, and 11 per cent in 2012.
Engineering construction was forecast to grow the fastest, with a lift of 12.5 per cent in 2011 and 13.1 per cent in 2012, equating to an estimated $82.5 billion in private sector work in 2012.
The Australian Industry Group said the solid prospects for growth would add to supply pressures in the industry, particularly for skilled labour.
Of the companies that responded to the survey, 72 per cent expected major or moderate difficulty in finding skilled workers during the six months to September this year.
Australian Industry Group chief executive Heather Ridout said huge infrastructure investments in the mining industry had resulted in the engineering construction sector entering a period of sustained and accelerating growth.
“This period will be marked by intensifying skill shortages, which will put pressure on labour and labour costs in other parts of the industry and potentially beyond,” he said.
The forecasts for growth were not so bullish, however, in the other parts of the construction industry, especially commercial construction, including retail, offices and industrial premises.
Commercial construction was tipped to lift just 1.2 per cent in 2011; with a stronger 6 per cent lift in 2012 thanks to a turnaround in private sector building.
“The high dollar, higher interest rates and tight credit conditions are contributing to the pressures on commercial construction, which is consistent with trends in the broader economy, ” Mrs Ridout said.
“Public sector investment in non-residential building is also weakening.”
