Business confidence rises

6th May 2017

Things are looking up for the Queensland economy and building industry, with business confidence improving during the past year in a new annual Master Builders survey.

The Master Builders Survey of Industry Conditions looked at results from April 2016-March 2017 and found the majority of respondents think the economic outlook is stable (52%), while 39% say it’s getting stronger.

Master Builders deputy CEO Paul Bidwell said conditions in the residential sector stabilised for the majority of respondents during the past year. In the non-residential sector they improved off a lower base.

“The percentage of respondents who regard conditions as stronger has increased. Even more telling is the significant decline in the percentage of people who regard conditions as weaker compared to the previous year. These results are expected to continue into 2018.”

The survey is one of the best ways to gauge specific industry expectations and business performance in all regions across Queensland.

The report also found:

The level of business activity improved markedly, with more respondents (39%) reporting stronger levels of work in progress, while fewer (29%) are reporting weaker levels. Businesses are also confident in the future, with nearly all respondents (91%) expecting the situation to improve or at least remain stable.

Average contract prices also strengthened. The majority of respondents (50%) saw prices hold steady for the quarter and there was a significant increase in those who reported stronger prices (up to 25%).

Turnover and profitability improved markedly, moving to a record high. Forty-four per cent of respondents now think turnover is stronger and 34% think profitability is stronger.

There was an increase in the proportion of respondents reporting higher material costs – up to 50% of respondents. And while average wages increased for a significant proportion of respondents (up to 37%), they remained unchanged for the largest proportion (49%).

Employment levels also strengthened, returning to positive territory, while apprenticeship levels were stable. Finding key staff has become easier, with fewer respondents reporting difficulties. The hardest positions to fill are supervisors, project managers and tilers.

Low levels of demand and labour costs continued as the most significant constraint on business growth. The lack of housing affordability was also cited as negatively impacting new housing demand.

Regional summary:

The south-east has been the real stand-out performer of 2016. Greater Brisbane, the Gold and Sunshine coasts all enjoyed a strong year. Looking forward, expectations are that this will begin to moderate in 2017 but remain positive.

Of the regions, the Downs & Western, and Wide Bay have been quietly ticking along with positive, yet modest results. They expect to continue in this way, without the large swings of the other regions.

Far North Queensland has experienced some strong results, while other parts of the industry struggle. On the whole they have a very positive outlook for the future.

After what has been a tough few years, the resource regions of Central Queensland, Mackay & Whitsunday and North Queensland are finally beginning advance. The improvements have been off a very low base so they are still operating well within negative territory. For many though, the worst is behind them and they are very confident in the future.

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