Conditions remain subdued in the Tasmanian construction industry thanks to a weak housing market and a lack of significant large-scale projects.
Following the wind back of government stimulus programs, activity in the state dropped back last year after a solid performance in 2010. At $529.4 million (seasonally adjusted), the overall value of building and engineering work done in the state during the September quarter last year was at its lowest level since the March quarter of 2009.
Going forward, building approval data is not encouraging. At $519.1m (not seasonally adjusted), the value of new building work approved in the six months to November was down by 21.7% on the same period in 2010 ($663.1 million) and 39.1% when compared with the same period in 2009 ($828.8 million). This means that new building work is now coming in much more slowly than it has in previous years.
Residential building conditions are awful. Following an already poor result in October, the seasonally adjusted number of dwelling units approved in November (154) was at its lowest level since January 2003.
Just as worryingly, aside from the $2.3 billion Gunns Pulp Mill (also known as the Bell Bay Pulp Mill), there is little in the way of new large-scale projects coming in for either building or engineering construction.
The state’s economy is in the doldrums. At $6.763 billion (seasonally adjusted), the value of Tasmania’s economic output in the September quarter last year was up by less than one percent when compared with the same period in 2010. Unemployment, currently sitting at 6.2%, is one whole percentage point higher than the national average of 5.2%. The state’s logging industry, already weakened by Gunns decision to stop logging in native forests, faces an uncertain immediate outlook as around 430,000 hectares of native forest have been given interim protection from logging whilst their conservation value is reviewed. Comments from state opposition leader Will Hodgeman that the state should put the ‘open for business’ sign back up may have been politically motivated, but they still reflect a general undercurrent of frustration with Tasmania’s economic performance.
Conditions in the state’s construction market are reasonably subdued. The latest ABS statistics indicate that 17,400 people were employed full time in the industry during the three months to November last year (not seasonally adjusted) – up from 15,200 during the same period in 2010 but well down on the 19,100 employed full time in the three months to November 2009.