Manufacturers of construction products throughout Australia have slashed their inventories in preparation for Donald Trump’s trade wars even as the nation’s overall economy is expected to fare reasonably well over the next twelve months, new data has shown.

(image via freepix AI generator)

Inventory management software provider Unleashed has released the December quarter edition of its Unleashed Manufacturing Report.

The report analyses inventory management trends throughout Australia across twelve manufacturing subsectors.

It focuses primarily on small and medium-sized manufacturing enterprises.

Across the twelve subsectors, the report found that manufacturers had reduced the value of their excess stock on hand by 60 percent over the quarter.

The most significant reduction occurred in the building and construction manufacturing subsector. In this subsector, average excess stock levels dropped by 77 percent during the quarter to reach just $61,366.33.

This represents the lowest value of stock on hand since 2018.

Unleashed Head of Product Jarrod Adam said that construction industry manufacturers were responding to global pressures through stock control.

He says this trend will likely continue throughout the year.

“If you’re an Aussie manufacturer who sells your goods overseas, you don’t want to get caught without an umbrella in a tariff storm,” Adam said.

“Clearly, many makers of goods in the construction sector have realised this and have been actively working to reduce their stock levels to avoid overextending themselves …

“… For building and construction manufacturers, there are several potential impacts of Trump’s tariffs to watch closely. Namely if Chinese steel is unable to be sold to the US, they could dump their stock in Australia, depressing our steel price and negatively impacting profits in the industry. Any Australian manufacturers that rely on US equipment may find their operating costs increasing.”

In addition to falling stock levels, the report also found that purchasing activity and sales were falling in the building and construction manufacturing subsector.

All up, the report found that building and construction manufacturing sales revenue plummeted by 30 percent during the December quarter to come in at an average of $48,529.

Meanwhile, the twelve-month rolling value of purchase orders fell by 3.26 percent during the quarter.

In addition to trade uncertainty, the sector is also being impacted by lower levels of building activity in residential construction – albeit with building approvals now firmly on an upward trend.

According to Adam, the drop in sales revenue provides additional reason for building and construction related manufacturers to be wary of over-extending themselves.

Regarding the fall in purchase orders, Adam said that this indicates that customers as well as suppliers are adopting an attitude of caution.

Australia’s economy overall to defy Trump tariffs

The latest data comes as the United States last week introduced 25 percent tariffs and all steel and aluminium products which are imported into the United States.

Whilst the impact of the tariffs is likely to be significant for specific individual sectors, there is a broad sense of optimism that the overall effect upon Australia will be manageable.

During a conference held by his firm two weeks ago, Oxford Economics Head of Macroeconomic Forecasting Sean Langcake said he expected Australia’s overall economy to ‘stare down global turbulence’.

According to Langcake, Australia’s overall export exposure to the US is relatively minimal, whilst the economy is expected to benefit from higher levels of consumer spending over coming months.

Meanwhile, Simon Croft, Chief Executive – Industry & Policy at Housing Industry Association, says that the fallout of tariffs will be relatively contained on account of Australia’s trade deficit with the United States.

“Even under the most pessimistic outcomes, $24 billion worth of Australian merchandise exports to the US is a tiny fraction of our global merchandise exports – just 4.6 per cent in 2024,” Croft said.

“Notwithstanding the specific pain that can be inflicted on individual targeted industries, the overall effect on the Australian economy, inflation and, therefore, interest rates, would be limited.”

Enjoying Sourceable articles? Subscribe for Free and receive daily updates of all articles which are published on our site

Want to grow your sales, reach more new clients and expand your client base across Australia’s design and construction sector?

Advertise on Sourceable and have your business seen by the thousands of architects, engineers, builders/construction contractors, subcontractors/trade contractors, property developers and building industry suppliers who read our stories across the civil, commercial and residential construction sector