This profile of the economic role Australian
construction focuses on the industry’s contribution to output and employment,
and is based on two publications from the Australian Bureau of Statistics. The
first is the National Accounts data
on gross domestic product (GDP), which provide the macroeconomic context of the
industry. GDP includes construction as part of private gross fixed capital
expenditure and is divided into dwellings, building and engineering
construction. The second is Australian
Industry, which provides data on the internal structure and performance of
the industry, which have undergone significant change over the last decade[i].
In Australia in 2016 the construction industry accounted
for 9.6 per cent of gross domestic product and 9.2 per cent of employment.
Construction’s share of industry output was 6 per cent in 2000, and the fifty
percent increase in GDP share was driven by the engineering work for the mining
and gas projects commenced during Australia’s mining boom, which is usually
divided into two phases, with mining boom 1 from 2001-2008 and mining boom 2
between 2010-2014.
Table 1. Construction in the National Economy 2016
|
|
Per cent of total
|
Value
|
|
Per cent of total
|
Value
|
|
Gross domestic product, bn
|
9.6
|
50.491
|
Employment, ‘000
|
9.2
|
1,110
|
|
Dwellings,
$bn
|
5.7
|
25.283
|
Building,
‘000
|
2.6
|
317.4
|
|
Building,
$bn
|
2.6
|
11.359
|
Engineering,’000
|
0.6
|
76.1
|
|
Engineering,
$bn
|
1.3
|
13.849
|
Cnst
services, ‘000
|
6.0
|
711.1
|
Sources: National
Accounts: Chain Volume Measures, ABS 5206; Labour Force, ABS 6291.
Figure 1. Industry Contributions to GDP 2015-16
Source: National Accounts ABS 5206. Industry
shares of Gross Value Added.
Changes in the level of construction are closely linked
to changes in GDP, however the volatility of construction is much greater, as shown
in Figure 2. When construction output is rising GDP is typically increasing,
and tends to peak around the same time. In periods when construction is
contracting, GDP grows slowly. While the residential and commercial building
cycles get the most attention, in Australia it is the Engineering sector that
has the greatest volatility, driven in part by the size of major projects, in
Figure 3.
Figure 2. Construction Industry and GDP
Source: National Accounts ABS 5206. Private
gross fixed capital investment
Figure 3. Construction Divisions and GDP
Source: National Accounts ABS 5206. Private
gross fixed capital investment
For the Australian construction industry, the most
widely used data is the value of work done, shown in Figure 4, with the level
of activity in residential building, non-residential building and engineering
construction. The major phenomena of the last decade was the increase in
engineering work during mining boom 1 from 2001-2008 to a historically high
level, followed by a rapid rise and fall during mining boom 2 between
2010-2014.
Figure 4. Construction
Source: Construction Activity: Chain Volume Measures
ABS 8782.
With the end of mining boom, the role of the building sector
of the industry in the macroeconomic transition has been important as the
contribution from engineering declined. This transition from the resource
investment driven economy, when business investment peaked at an all-time high
of 18 per cent of GDP, has required growth in residential building to support
employment and output. That is currently being tested as the residential building
cycle appears to have peaked. There were significant compositional and
structural changes in construction during the mining boom, discussed in the
next post.
[i] Beyond the regular detailed output and activity statistics from the
ABS there are few data sources. An infrequent Construction Industry Survey is published (ABS
8772, last two in 2011 and 2003).
