As the home building recovery gathers momentum, employment within the construction industry in Australia has hit its highest level in the nearly 30 years since records have been kept tracking these numbers.

On a seasonally adjusted basis, data from the Australia Bureau of Statistics indicates that the total number of people employed in the building sector throughout the nation rose by 1.5 per cent in the three months to August, coming in at 1.047 million – the highest number since the ABS commenced its data series on employment numbers for different industries in November 1984.

New South Wales led the way, with building sector job numbers in that state being up by almost 30,000 compared with the same period last year (seasonally adjusted data is not given on a state by state basis, making quarterly comparisons of data on individual states of limited value).

Elsewhere, job numbers in Tasmania were up 3.4 per cent year on year whilst the number of people employed within the sector in Victoria, Queensland and Western Australia was down 6.6 per cent, 3.3 per cent and 0.4 per cent respectively compared with the previous corresponding period 12 months earlier.

The construction sector is the third largest employing industry in the country behind healthcare and social services and retail.

Around Australia, a surge in demand for building sector workers is being driven by the massive recovery in home building, especially in New South Wales and Sydney where several years of low building activity has led to what is widely considered to be a significant undersupply of available housing stock.

While this has yet to manifest itself into any significant shortage of labour supply or upward pressure on wage or subcontractor rates on an aggregate basis, anecdotal evidence suggests pressures may be emerging in some areas which are primarily exposed to the residential side of the industry.

The latest trades report from the Housing Industry Association, for instance, suggests that shortages are starting to emerge in trades such as bricklaying, ceramic tiling and roofing, and that trade prices for bricklaying and tiling have risen by 8.1 per cent and 5.9 per cent (year to June) respectively.

Click to enlarge

Click to enlarge

Master Builders Australia chief economist Peter Jones welcomed the latest data, noting that New South Wales had gone from being a ‘basket case’ in the industry to a ‘fast emerging powerhouse’, and that some labour market momentum was most likely building in Queensland residential sector despite the negative overall headline numbers in that state, which are most likely reflective of the anticipated pull-back in resource work.

Going forward, Jones is reasonably optimistic about the outlook, suggesting that the strength in housing along with more modest gains in commercial building and momentum from upcoming infrastructure projects will marginally offset the loss of jobs on resource projects.

He says while Victoria would hold steady at best and any net growth in Queensland will be ‘muted’ as stronger housing activity is offset by lower levels of resource work, New South Wales would continue to be the standout performer amid continued momentum in residential and a strong pipeline of commercial and infrastructure projects.

“I see over the next few years a sort of consolidation of employment as the disparate forces act in different directions,” Jones said. “I do think we are likely to see modest growth in total Australia building and construction jobs as the effect of the mining boom flows through but is offset as residential building ramps up.”

Key facts:

  • At 1.047 billion (1.029 billion before seasonal adjustments), the seasonally adjusted number of people employed in the construction industry throughout Australia during the three months to August was at its highest level since ABS records in this area began in 1984.
  • Construction is the nation’s third biggest employing sector behind health and social services and retail.
  • Of the industry’s workforce in the three months to August:
    • 859,300 (84 per cent) worked full time in the industry
    • 38,900 were unemployed, giving an implied unemployment rate of 3.64 per cent.
    • A further 75,500, or 7.3 per cent of the workforce, were ‘underemployed’ or worked fewer hours than what they desire
    • Around 674,700 people worked in ‘construction services’, while 245,100 worked in building construction and 78,100 worked in engineering construction (30,700 did not fit into any of those categories).
    • 913,649 were males and 114,889 were females, meaning women make up around 11.2 per cent of the sector’s workforce.