The construction sector appears to have weathered the COVID storm well, according to recent statistics. In this insight, Masco Group’s Director, Abdul-Majid Abu Mahmoud, explores these findings and shares his thoughts..
A new slew of data released over the last few weeks confirms what many of us in the construction sector are seeing.
The industry appears to have turned a corner in the post-COVID era (and by this I mean the era post COVID becoming a reality; not that we’ve defeated the virus just yet!)
Several key pieces of data have been revealed over the last few weeks, and they tell an interesting story.
First, we’ve seen strong house building figures. Secondly, we’ve seen less pronounced declines in apartment and engineering works than many people anticipated.
Taken together, these figures are a further sign of economic recovery from the ongoing recession.
To make the picture a little brighter still, the Reserve Bank of Australia has announced that it will use an ever-wider series of monetary tools to help the economy along, launching a massive program of quantitative easing that is likely to have positive downstream impacts on our sector.
Taken together, this has led to an increase in the Housing Industry Association-maintained construction index, which rose 7.5 points in October to 52.7, indicating a mild expansion in the sector.
Remarkably, this is the first time the index has breached the 50-point mark since 2018! It quite incredible to think that the index sits at this number so quickly following a once-in-a-century event.
As I’ve written previously, getting Australians back to work is a key priority of the government, and our sector helps power that. The RBA embracing a growing arsenal of monetary tools in a low interest environment is just one element of this. While the RBA is not “the government” proper, it is a powerful institution whose levers could to help reduce unemployment levels.
The RBA cut the cash rate to a record low 0.1 per cent earlier this month. Practically, this means a monthly saving of more than $30 on a $400,000 mortgage if passed on in full by retail banks.
My hope – as of others in the construction sector – is that this translates to ongoing demand for dwelling construction. At its very core, this is what helps power construction sector strength, and I have no doubt it will return.