Victorian Building & Construction Confidence Report

Transcription

1 Victorian Building & Construction Confidence Report March Quarter 2014

2 About this report Master Builders members from across the country participate in an online quarterly survey that benchmark their views on the national economy, their business prospects and the conditions they face in the building and construction industry. Leading companies throughout the industry participate in this survey, including residential builders, commercial construction firms and subcontractors. Large and small businesses participate, ensuring our survey is the nation s leading quantitative analysis of sentiment in the building and construction sector. Responses are indexed (unless otherwise indicated) by taking the difference between the percentage of respondents nominating good or very good (or a rise) conditions and those nominating poor or very poor (or a decline) conditions. An index reading of is the neutral or no change mark, with responses above indicating favourable or improving conditions (with the exception relating to industrial relations concerns, which is detailed later). In calculating the index, the responses are weighted according to firm size. The index is calculated by taking a weighted sum of the proportion of responses to every answer from an index between 100 and 0. The strongest response is given the greatest weighting of one with the weakest given the lowest weighting of zero, and proportional in between. As a result, if all respondents answered the strongest response, the index would be 100. If they all answered the weakest response, the index would be zero. If n is the number of response categories, prop is the proportion of responses in a given category and i is the response category, then the formula for the index is: = This report outlines the responses provided by Master Builders members in the March 2014 quarter. It primarily refers to conditions reported by Victorian members and contrasts these results against responses from Master Builders members across the nation. The survey was undertaken in Victoria in March 2014, with 386 responses in Australia, of which 152 came from Victoria. Disclaimer: The national survey of building and construction (or these Victorian results) is not legal, financial or business advice. Whilst every care has been taken in preparing this document, no responsibility will be accepted for actions taken in reliance upon information contained in this document. Master Builders Association of Victoria and Master Builders Australia Limited 2014 Images on the front cover Images on the front cover of this report depict projects that have received Master Builders awards in Victoria in Moving clockwise from the top of the page are: Cameron Construction s Best Renovation/Addition under $200,000 project in Malvern East; Bluestar Living s Best Multi Unit Development up to 3 Units in Month Albert North; Equiset Construction s Best Sustainable Energy Project at 990 La Trobe Street in the Docklands; and Watpac Construction s Melbourne Park Redevelopment - East Plaza project. Master Builders Association of Victoria 332 Albert Street, East Melbourne, Vic 02 Ph: (03) Fax: (03) mbassist@mbav.com.au Offices: Ballarat Bendigo East Melbourne Geelong Gippsland Mornington South Melbourne Shepparton Warrnambool Wodonga

3 Confidence builds in Victoria s construction sector Economic Expectations Victorian builders and construction companies are feeling more buoyed about our community s short-term economic future. The Economic Expectations for Victoria s construction sector has increased to 57.0 points in the March 2014 quarter, up from 53.9 points in the previous quarter and 44.3 points the quarter before. This index is now at its highest point since late Despite many consumer and business confidence surveys revealing a bump after last year s Federal Election followed by a significant drop, confidence levels in our own sector here in Victoria are consistently improving. This survey was conducted before the handing down of State and Federal Budgets, which earmarked funds to deliver a range of city-shaping infrastructure projects that could boost confidence levels further, particularly for those in the civil construction sector. The industry also feels more confident about the current state of our economy, with the Current Economic Sentiment surging this quarter to its highest point in three years. The index now stands at 49.4 points, some 8.4 points higher than the December 2013 quarter and 13.7 points higher than the September 2013 quarter. While the index remains below the neutral mark, builders in Victoria maintain a more positive economic outlook than their interstate counterparts a trend occurring in 23 of the past 24 quarters. The efforts of successive governments to maintain a stable economic environment, retaining the state s AAA credit rating and delivering consistent budget surpluses, has no doubt helped deliver this long term trend within our sector, as has the resilience of our local industry. Current Economic Sentiment MarQ 2014 Victorian Building and Construction Confidence Report 1

4 Industry and business expectations are also on the rise Optimism amongst builders and construction companies about how their industry and businesses will perform is also improving. The Industry Expectations climbed 1.4 points to 57.8 points in the March quarter and is now at its best level since the September 2009 quarter. For the second quarter in a row, the index now sits above five-year trend levels and remains ahead of national confidence levels. Industry Expectations Builders are also feeling much more positive about their own business prospects for the next six months, expecting solid improvements in their own business activity. Our index measuring builders business expectations is now at 67.0 points, a substantial rise of 7.8 points since the previous quarter. It is the most optimistic outlook Victorian builders have recorded for their own business prospects since mid-2010, providing positive signs for what lies ahead throughout our sector. Business Expectations 2 Victorian Building and Construction Confidence Report MarQ 2014

5 Current activity levels paint a positive picture When looking to the future, builders have become more positive about opportunities for their business but recent surveys have shown current activity levels remain relatively low. This, however, is not the case now, with our Business Activity rising to 58.8 points. It is now on par with five-year averages and is the most positive outcome in more than two years, with the index has risen 7.8 points in the past quarter alone. Business Activity As a result, profitability levels have also climbed in the past quarter to 48.6 points, strengthening businesses across our sector. This index has now remained below the neutral line for nine successive quarters and it remains below five-year trend levels too. It has, nonetheless, improved significantly compared to the low profits recorded in responses and feedback received throughout Current Profitability Display centre traffic and commercial enquiries have also improved in the quarter, reflective of both the public and private sectors interest in funding residential and commercial building works. This index climbed a staggering 9.6 points in the March quarter and now stands at 52.1 points the first time it has been in positive territory in three years. MarQ 2014 Victorian Building and Construction Confidence Report 3

6 Employment opportunities could increase For the first time since early 2011, our Employment Intentions is in positive territory, meaning a significant proportion of builders and construction companies believe their employee and subcontractor numbers will be higher in six months time compared to now. As more activity comes online, new opportunities for work will exist for Victorians. This index now stands at.3 points, up from 44.9 points the previous quarter and 42.0 points just one year ago. It is above five-year average levels and also slightly higher than the national index. Employment Intentions This upturn could also include more opportunities for apprentices, with builders showing some appetite to put on more apprentices. Our Apprentice Intentions climbed 1.0 point in the March quarter to 55.7 points. This is 5.3 points higher than the same time last year but does remain slightly below the five-year average level. Apprentice Intentions 4 Victorian Building and Construction Confidence Report MarQ 2014

7 Labour is available to help build Victoria s future Builders and construction companies have reported improvements to labour availability in the past quarter for all types of roles. At the end of 2013, our survey indicated bricklayers were the most difficult site staff to find. Now, it is project managers, site managers and foremen/supervisors that remain the most difficult for companies to recruit. Difficulty in finding tradespeople, subcontractors and staff Project managers Site managers Dec-13 Mar-14 Foremen/supervisors Office staff Labourers Carpenters Bricklayers Scaffolders Concretors Steel fixers Plaster fixers Painters Electricians Tilers - wall and floor Tilers - roof Building consultants Victorian builders and construction companies report it easier to find suitable people for most positions compared to those in other states. Fields that were more difficult for Victoria s sector to recruit, however, include carpenters, labourers, bricklayers and tilers. MarQ 2014 Victorian Building and Construction Confidence Report 5