If the latest data is anything to go by, Tasmania’s construction industry and its broader economy both have one thing in common: they are struggling.
The state’s construction industry continues to languish as work on Building Education Projects (BER) continues to wind down. In September, the overall value of buildings approved in the state (not seasonally adjusted) dropped by 9.58%, according to the Australian Bureau of Statistics (ABS). Moreover, at $247.3 million, approvals during the September quarter were down by 18.75% when compared with the June quarter and 28.11% on the September quarter last year (see chart below). Approvals have now fallen during three of the past four months. Bottom line: new building work is coming in slowly.
Most of the fall back is centered around non-residential building, which has been hit by the drop off in BER projects. Housing, by contrast, may be picking up – residential building approvals in the state were stronger in August and September than at any other time so far this year.
In civil construction, the state government has floated the idea of using taxpayer dollars to build a new woodchip facility in the south if the Triabunna woodchip mill does not reopen. And despite two legal challenges to stop work progressing on the $2.3 billion Gunns Pulp Mill, the odds of that project going ahead have firmed up on expectations that Gunns Ltd, the company behind the mill, will announce a joint venture partner in coming months. Other than that, there is not a great deal of civil construction activity at the moment.
If building is weak, so too is the state’s broader economy. Tasmania ranks as Australia’s second worst performing state in terms of retail trade and the second worst performing state in terms of overall economic growth, according to the most recent State of the States report from Commonwealth Securities (Comsec).
That said however, the report also says that the state has one of the strongest job markets in the nation (it has a ‘trend’ jobless rate of 5.0), which Comsec chief economist Craig James believes “could prove a catalyst driving improvement in the Tasmanian economy in coming months.” The report also says that Tasmania leads the nation in terms of performance on equipment investment.
Key Moving Sectors
The most active sectors at the moment are healthcare and retail.
The healthcare sector will be boosted from work on the Royal Hobart Hospital.
- Royal Hobart Hospital Redevelopment
- UTAS Medical Science Precinct – Stage 2
With a few projects in the immediate term pipeline, there are some signs of life in the state’s retail construction sector.
- Devonport Homemaker Centre
- Don Road Market Place Precinct
- Big W Launceston