bleak outlook for building industry, mbaa

Bleak outlook for building industry, warns Master Builders Australia

Stephen McMahon Herald Sun
June 29, 2012 12:46PM
THE building sector has warned it is in danger of sliding into "recession'' with no signs of an imminent recovery.

A survey of 500 builders shows that sentiment is approaching GFC levels as the work dries up with activity 20 per cent below its long-term average level.

Master Builders Australia chief economist Peter Jones said the outlook is "bleak'', with the recent Reserve Bank rate cuts having failed to stimulate new home buyers.

"Builders and contractors are in survival mode,'' he said.

"Nearly all the key survey metrics fell in the June quarter and index readings are well below 15-year averages.''

Mr Jones said the RBA must cut rates again starting at its June board meeting on Tuesday and the major banks must pass it on to customers and small businesses.

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"Monetary policy is the key to preventing the building and construction industry from falling into recession - which would have serious implications for the broader economy,'' he said.

The June quarter survey shows profit levels are down 22 per cent and expectations are 23 per cent below the 15-year average.

Almost 90 per cent of builders are also worried the carbon tax - which is becoming law on July 1 - will impact negatively on their business.