Roads, bridge building to thrive in 2017

Trevor Chappell
(Australian Associated Press)

Road and bridge construction, sugar manufacturing, and oil and gas extraction are among the industry sectors set to fly in 2017 whereas heavy industry construction, apartment construction and milk powder manufacturing lead those set to fall, says market researcher IBISWorld.

“Many of the industries likely to disappoint this year have performed strongly in recent years, but research suggests boom times for these industries are over, at least for the next 12 months,” IBISWorld senior industry analyst Nathan Cloutman said on Monday.

“Some of the industries that IBISWorld anticipates will grow over 2017 have remained depressed for some years, giving rise to demand for those industries’ products and services.”

IBISWorld said big transport infrastructure projects such as the NorthConnex M1 to M2 link and WestConnex in Sydney are driving robust growth in the road and bridge construction industry.

Revenue in that sector is expected to grow by more than 27 per cent in 2016/17, to $20.1 billion.

These private-public funded projects are set to dominate the road construction landscape for several years,” Mr Cloutman said.

An increase in the planted area for sugar cane in response to growing global sugar consumption is expected to boost revenue in the sector by 19.9 per cent in 2016/17, to $3 billion.

IBISWorld said local sugar production is forecast to rise by 3.7 per cent during 2017, with global sugar consumption likely to exceed production for a second year in a row.

Oil and gas extraction revenue is forecast to rise by 16.8 per cent to $38 billion in 2016/17 as big LNG projects such Gorgon and Wheatstone in Western Australia and Gladstone in Queensland, start operations or lift output.

Leading those sectors expected to find it tough in 2017 is the heavy industry and non-building construction sector, where revenue is forecast to fall by 38.1 per cent to $37.8 billion – down by nearly half on its peak revenue of $71.6 billion in 2013/14.

IBISWorld said the sector faces a slump, with the recent completion of three giant LNG processing plants in Queensland and the near completion of other LNG projects in Western Australia and the Northern Territory.

Revenue from the construction of apartments and townhouses is projected to fall by 26 per cent to $19.3 billion in 2016/17.

Mr Cloutman said multi-unit residential building starts peaked in 2015/16 but demand is expected to deteriorate sharply in the current year as major developments are completed and with several key markets oversupplied.

Another sector, milk powder manufacturing, is expected to struggle in 2017 as beaten-down prices stage only a minor recovery and low prices discouraging production.

Industry revenue is forecast to fall by 12.2 per cent to $757 million in 2016/17.


Like This