There are signs of improvement across the nation’s construction sector with a slight increase in positive sentiment being recorded by international property and construction consultants Davis Langdon in their latest research.

The Davis Langdon Construction Sentiment Index has inched up by two points to reach 63 compared to six months ago. The research canvasses the views and sentiment of approximately 1800 construction related business across the country.

Davis Langdon’s Managing Director, Mark Beattie, said there were glimmers of light showing up throughout the construction sector.

“The industry continues to face a reoccurring set of obstacles and a mixed outlook in terms of workload,” he said. “However, labour force capacity constraints are not as prevalent and an encouraging proportion of industry participants reported increased levels of new business from the private sector.”

Davis Langdon’s Australia and New Zealand Research and Knowledge Manager, Michael Skelton, said the research showed that skills shortages were easing – although not expected to last long - and that respondents believed the civil and resource and health sectors would be the best performers over the next 12 months.

Civil and resource was nominated by 72% of respondents as the likely best performing sector, as was health and aged care which was tipped by 66% of respondents.

“There is some evidence to suggest that sentiment is turning a corner for the retail, office and refurbishment sectors with the number of respondents identifying retail as a potential growth sector rising from a low of 18% in March 2009 to 45% in the current survey,” said Mr Skelton.

The number of people who believed there were problems within the construction industry dropped to 77%, down from 85% in March.

“In an encouraging sign for the industry, more respondents are experiencing a rise in new business activity with participants reporting that their level of new business – driven by public and private sector investment - had increased in some way, rising from 43% in March to 49% now,” said Mr Skelton.

“Those with diminishing levels of new business amounted to 27% of respondents, a slight increase on March. While those expecting workloads to remain the same diminished.

“It is promising to note that 46% said they had experienced an increase in new private sector activities.”

He said the general outlook for workload levels in the next 12 months had lost some of its shine in the current survey with a considerable number expecting workloads to remain steady, 47% up from 40% in March, but this varied significantly across the states.

Mr Skelton said 71% of Western Australian respondents anticipated an increase in workload while in Queensland only 10% were this positive about the coming 12 months.

In terms of issues in the sector the respondents listed access to suitable finance as the number one obstacle in the building and construction process.

“Compared to our last survey in March industry participants were less optimistic about the situation improving and expect access to finance to remain their biggest hurdle over the next year,” he said.

Sentiment towards industrial relations has also deteriorated since the March sample was taken.

“While 82% of respondents agreed that industrial relations are ‘Good or Very Good’ at the moment, when asked about the upcoming 12 months, this figure drops to 70%. Perhaps a sign of uncertainty associated with the federal election which occurred during the survey.” he said.

“Respondents are anticipating a poor industrial climate ahead with 30% expecting ‘Bad or Very Bad’ conditions which is double the number of six months ago.”

On the issue of staff levels in the coming six months 51% of respondents anticipate that permanent staffing levels will remain the same while 67% expect contract staff levels to hold steady.

The number of respondents who feel that the industry is experiencing a skills shortage was 54%, a drop of 9% on the March result.

The length of time taken to obtain planning approvals remains an issue with 74% of respondents reporting that they continued to experience excessive of protracted timeframes. This was up slightly from 70% in March.

Victorian based respondents who cited this as an area of concern numbered 90%, the highest of all states and up from 67% in March.

For further information, contact Meaghan Jones on +61 3 9933 8800 or email mjones2@davislangdon.com.au 

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