Wednesday, April 10th, 2013 - Roy Morgan Research
Construction businesses are around 50% more likely than average to say the cost of materials and labour impacted performance in the past year, the latest Roy Morgan Business Survey shows. 

While the economy and level of demand is the most important performance factor across all industries, including Construction, 36% of Construction businesses say cost of raw materials impacted performance compared to just 24% of businesses overall.

While labour costs impacted only 22% of businesses overall, (making the factor less influential than competition, government or taxes), it’s the third-most impactful factor among those in Construction: around one in three report that such costs affected performance in the past year.

However the significance of these factors varies even within the Construction industry: 36% of Heavy and Civil Engineering businesses say labour costs were influential (almost twice as many as cite costs of materials) while Plumbing businesses were the most affected by both types of cost.

Nigel Smith, Director of Business Research, Roy Morgan Research, says:

“Amidst conflicting media reports on the health of the Construction industry in general, the Roy Morgan Business Confidence data shows the Construction industry is among the least confident.

"While Construction businesses are as concerned about the overall state of the economy as other businesses they are also experiencing other pressures.

“Apart from the economy, it is clear that cost pressures have been the most important concerns of the industry over the last year, which would usually indicate an industry growing so strongly it has reached capacity constraints. However the Construction industry has been underperforming over the last year and expects to continue underperforming in the next, so its concern about costs most likely reflects an industry facing severe pressure on margins.

“However the fact that 25% of Building Construction businesses report ‘Access to finance’ as an important issue (more than twice the level for Australian businesses in general) would tend to support the view that this is an industry in trouble.”

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Source: Roy Morgan Business Single Source, March 2012 – February 2013, All Australian Businesses, Sample n= 13,510.

Question: "In the last 12 months, which if any of the following factors have had an influence on the business's performance?" (% reporting each statement).

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Keywords

Construction industry, material and labour costs

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