A quick review of international markets and their effect on construction and major projects

Figures released in the last week have shown mixed rates in the international major projects and construction markets.

Australia’s previously booming economy is slowing down, with forecasts that investment in the mining industry will drop 26% in the next year.  This lowered investment results from low prices of oil, coal, iron ore and other metals, and from uncertainty and lower demand in the market.

This is a flow on effect from the fall in China’s decrease in growth statistics. Australia exports a number of commodities including iron ore to China. The lower growth creates a lower demand for those products. This lower demand is already in evidence with a 12.3% drop in imports in China in the last year.

However, the US has reached its highest level of construction spending since November 2008, with increases in housing, non residential and government construction spending. The US construction market was slow to bounce back after the global financial crisis but these statistics show that it appears well on the way to recovery.

New Zealand needs to pay attention to external markets and how these affect us.  Our construction market must be prepared to manage the effect of rising or falling prices of imported and exported goods.

It will be interesting to see whether the Australian construction market increases its investments and projects in New Zealand to aid diversification.  For a more in depth discussion on the relationship between the New Zealand and Australian markets please click here for our previous blog post.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s