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‘Twin Boom’ Adds to Construction Sector Woes

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Economists are tipping a construction boom next year as the battle to deliver Australia’s $110-billion infrastructure pipeline looms.

BIS Oxford Economics has forecast a 12.3 per cent increase to the value of engineering construction activity in the 2022 financial year to a total of $99.5 billion.

Principal economist Nick Fearnley said publicly funded transport infrastructure would lead the industry’s resurgence.

“A boom in work on major publicly funded transportation projects is set to drive a rebound in engineering construction activity over 2021,” Fearnley said.

“Investment in renewable energy generation is also set to rebound, supported by work on a number of mega-projects in Queensland."

Fearnley said engineering construction activity was the largest component of total construction work done, and it was forecast to grow strongly during the next three years.

Construction activity is projected to be worth about $232 billion per annum over the next five years, and engineering construction will account for about 47 per cent of that.

The Australian Construction Industry Forum (ACIF) has projected a 6 per cent increase to $256 billion to the sector’s bottom line, while infrastructure construction will grow 7.5 per cent this year, according to a report.

The industry is facing a twin boom in both residential and infrastructure construction.

Governments have committed to a pipeline of infrastructure investment, producing a surge in hard infrastructure including energy, transport, and water, as well as in social infrastructure including health and education buildings.

But according to the Australian Construction Market report, the full pipeline of work is challenged by material and skilled trades shortages.

FTI Consulting managing director Kerry Barwise, who partnered with the ACIF to create the report, said building and construction would lead Australia’s economic recovery.

“Twin booms in house building and infrastructure indicates the economic recovery will be led by building and construction, with twin growth trajectories set to add more than 100,000 jobs and to reach $256 billion this year,” Barwise said.

“Despite this surge supporting the economy, the going is getting tougher … shortages of building materials and skilled trades, as well as alarmingly high input costs and rising house prices represent significant challenges, all of which may add pressure to already rising inflation.”

Bricklayers top the list of trades shortages in Australia.

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Article originally posted at: https://www.theurbandeveloper.com/articles/construction-232bn-boom