Cranes a gauge of activity
The latest figures from the Australian Construction Industry Forum show modest growth is expected in construction activity over the next two years.
In real terms, engineering, commercial and residential building work is tipped to grow by 3 per cent in 2013-14 and 2.3 per cent in 2014-15.
CommSec chief economist Craig James said the good news was that a pick-up in commercial and residential building should offset softer engineering work.
"The latest views from ACIF will soothe jangled nerves, especially worries that the economy will weaken markedly following the peaking of the construction phase of the resources boom," he said.
The Rider Levett Bucknall's crane index is a practical bellwether of Australia's building activity.
The biannual index tracks the number of construction cranes on the capital city skylines throughout Australia as an indication of the workload.
Rider Levett Bucknall director Stephen Ballesty said that at first glance the current numbers of cranes within five kilometres of all major central business districts indicated increased workload from October 2012.
However, future workload remains uncertain across most markets.
Mr Ballesty said the cranes on the city horizons would be boosted by the fact that sentiment in Australia's property industry had hit an 18-month high, buoyed by increased confidence in the housing market and the Reserve Bank of Australia's continued support of low interest rates.
According to the firm's index, there are 17 visible cranes within Melbourne's CBD. Another 40 cranes are visible within a five-kilometre radius.
Major sites include Far East Corp's Upper West Side stage two, Emporium, City West Police Complex, Phoenix Apartments, Scots Church redevelopment, Melbourne Park redevelopment, Peter MacCallum Cancer Centre and a Hickory Group development.
South of the Yarra, Contexx, Multiplex, Hamilton Marino and Built all have apartment buildings under way, while at Docklands the cranes can be seen at Mirvac and MAB's residential development sites.
Frequently Asked Questions about this Article…
The Rider Levett Bucknall crane index is a biannual measure that counts construction cranes on Australian capital city skylines (typically within five kilometres of CBDs) as a practical bellwether of building activity. Everyday investors can watch the index as an easy, visual indicator of commercial and residential construction momentum, which can signal activity in property, materials and construction-related sectors.
According to the firm's index cited in the article, there are 17 visible cranes within Melbourne's CBD and another 40 cranes visible within a five-kilometre radius of the city centre.
Major sites mentioned in the article include Far East Corp's Upper West Side stage two, Emporium, the City West Police Complex, Phoenix Apartments, Scots Church redevelopment, Melbourne Park redevelopment, the Peter MacCallum Cancer Centre and a Hickory Group development. South of the Yarra, Contexx, Multiplex, Hamilton Marino and Built have apartment projects under way, and Docklands cranes are visible at Mirvac and MAB residential development sites.
The ACIF's latest figures, as reported in the article, tip real-term growth in engineering, commercial and residential building work of about 3.0% in 2013–14 and 2.3% in 2014–15.
CommSec chief economist Craig James noted that while engineering work is softer, a pick-up in commercial and residential building activity should help offset that weakness. The combined outlook points to modest growth rather than a marked slowdown.
The article says property industry sentiment had reached an 18‑month high, buoyed by increased confidence in the housing market and the Reserve Bank of Australia's continued support of low interest rates.
Not necessarily. The article reports that while current crane numbers (from October 2012) indicate increased workload at first glance, future workload remains uncertain across most markets. Cranes are a useful indicator, but they don't guarantee ongoing growth.
Investors can use crane counts and construction forecasts as a quick, visual gauge of local building activity—helpful when assessing exposure to property, construction and related stocks. The article suggests treating the crane index as a bellwether: it signals current workload trends but should be considered alongside broader data (like ACIF forecasts and economic commentary) because future workload can still be uncertain.
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