Construction work done dipped again in the June quarter with a sharp decline set to unfold as the effects of credit crunch and economic downturn begin to show through, according to Master Builders Australia (MBA). However engineering construction rose in the June quarter and the pipeline of resources-related work yet to be done and State Government infrastructure spending should cushion the impending fall.

“The key to the outlook for the construction industry will be whether an upswing in the residential sector can offset the decline in non-residential building and weaker engineering activity," says Peter Jones, MBA’s chief economist. Seasonally adjusted, the chain volume of construction work done in the June quarter fell by 0.1 per cent to $35 billion to be 5.4 per cent above levels in June quarter 2008. The chain volume of building work done in the June quarter was down by 5.7 per cent to $16.8 billion, to be down 8.5 per cent on the previous June quarter.

Work done on residential building fell by 2.6 per cent to $9.7 billion, to be down 7.6 per cent on the corresponding figure a year earlier. Non-residential building fell by 9.5 per cent to $7.1 billion, to be down 9.8 per cent on June quarter 2008. Engineering construction work done rose by 5.7 per cent to $18.2 billion to be up 22.7 per cent on the previous June quarter level.

“There will continue to be substantial fallout from financial constraints and a weak economy on the building and construction industry,” adds Jones. “Government stimulus measures will help cushion the blow, but they will not be enough to prevent a major downturn in construction over the next 12 months.” Non-residential building has already suffered a 10 per cent decline with the boost from public stimulus programs set to be swamped by a major fall in private sector work. Commercial builders are being choked by tough lending criteria imposed by financial institutions and funding issues and softening market conditions is leaving a significant hole in activity.