The recent cut to the official cash rate has failed to ignite construction activity according to a survey of over 500 builders conducted by Master Builders Australia (MBA).

 

MBA’s National Survey of Building and Construction measures the industry’s conditions, and found that the sector’s activity has dropped below Global Financial Crisis lows.

 

Peter Jones, Chief Economist for Master Builders Australia said that despite Reserve Bank interest rate cuts totalling one and a half percentage points, builder sentiment has continued to fall.


“The failure of rate cuts to spark any improvement in forward indicators is the most disappointing and surprising aspect of the survey findings,” Mr Jones said.

 

“The survey found builders own business conditions were now weaker than during the global financial crisis. 

 

“Profits, sales, display centre traffic, enquiries and work on the books all remain dangerously low. Increasingly, builders and contractors are tendering for projects with little to no margin, which is not sustainable for either the contractor or the client.”

 

The survey asked builders and contractors about their intentions regarding the likely level of employees and sub-contractors for the next six months. The results produced an index of 42.3, with anything under 50 suggesting a reduction in the industry’s workforce.

 

“The results confirm Reserve Bank deputy governor Philip Lowe’s statements about Australia’s softening labour market to Financial Services Institute of Australasia on Tuesday.

 

“The latest survey backs up Australian Bureau of Statistics data showing that construction employment fell by 70,000 in the year to August, fast becoming one of the worst job slides since the economic recession of early 1990’s.

 

“The industry is hoping the Reserve Bank’s rate cut in October serves as the catalyst to boost confidence in a way previous cuts have failed to,” Mr Jones said.