Confidence in building industry falls

A new survey has found builder sentiment fell back in the last quarter corresponding with declining expectations for building industry activity and raising concerns over future economic and employment prospects.

The National Survey of Building and Construction was released by the Master Builders Australia today.

According to the survey, builders' own-business activity and profits fell in the June quarter and despite recovery from last years' trough, most indicators remain well short of levels achieved prior to the downturn.

The sharp rebound in builder sentiment seen in the second half of 2009 has reached a plateau and forward indicators such as sales, enquiries and capacity utilisation are not yet pointing to the likelihood of any strong and sustainable recovery in building industry conditions.

"A solid pick up in builder sentiment experienced in recent times following the collapse of confidence in the wake of the global financial crisis and economic downturn, appears to have stalled," said Master Builders Australia chief economist, Peter Jones.

"Builders are now less enthusiastic about prospects for a strong upturn in the residential sector and non-residential building has fallen back after the welcome boost from government stimulus programs such as the BER," he said.

"Although job losses have been less than was expected at the height of uncertainty associated with the global financial crisis, the latest survey reveals builders are not likely to boost their workforces this year."

"The latest survey shows weaker employment intentions in the June quarter, with businesses now likely to cut back on employees and sub-contractors over the next six months.

"Financial constraints remain an issue for commercial and residential builders alike," said Mr Jones.

In light of the survey Master Builders urged the Reserve Bank to keep interest rates on hold.