Builders expect industry activity to fall and with profits now under pressure jobs may go, Master Builders Australia says its December quarter 2011 national survey shows.

Master Builders Australia Chief Economist, Peter Jones, said: "Builder sentiment remains gloomy with the latest survey revealing poor profitability as well as disappointing sales and display centre traffic/enquiries."

"The building industry is struggling, with little evidence of the pick-up in private sector demand needed to fill the gap left as government economic stimulus programs end," he said.

Master Builders' latest national survey for the December quarter shows:

  • Builders expect overall industry activity to fall over the next six months;
  • Builders' own-business conditions stabilised somewhat in the quarter; but
  • Builders with significant operations in both residential and non-residential sectors report poor current conditions in both industry sectors.

Jones said, "The building and construction industry has lost the cushioning effect of government stimulus programs whilst the credit squeeze and other regulatory constraints continue to affect business operating conditions."

"The national survey confirms how weak conditions have become, with the December quarter revealing significant excess capacity in the industry as well as evidence that builders are experiencing very little difficulty finding labour resources."

"The latest readings do not auger well for activity in the building and construction industry over the next six months and with profits under pressure it is little surprise that builders are indicating they may reduce levels of employees and subcontractors in the period ahead."

Jones added: "A glimmer of hope is that the December quarter survey - taken just after the November interest rate cut - shows some early signs of a turnaround or improvement in some of the indicators."

He said the Reserve Bank should consider further rate cuts to make sure a private sector recovery is able to gain momentum.

The opinion is shared by major industry supplier Boral, its chief executive Mark Selway reported in the Australian Financial Review saying another round of interest rate cuts is needed to kick-start commercial and residential construction activity in 2012.

The full report is available at www.masterbuilders.com.au