Builders still struggling: survey

STRUGGLING builders are bracing for another tough year, after sales and profits fell in the last three months of 2012 and many in the industry struggle to obtain access to finance.

A survey of more than 400 builders and contractors conducted by Master Builders Australia shows the sector is expecting the shed jobs early this year as businesses struggle with falling sales and profitability.

The survey's index measuring current business condition fell from 47.4 to 45.2 in over the three months to December.

A reading below 50 indicates a decline in activity over the quarter and a lower reading indicates a greater decline.

The index measuring builder's intentions regarding staff numbers and the use of subcontractors over the next six months fell to 37.0, indicating builders expect to reduce the size of their workforce.

The survey also showed the sector was suffering a credit crunch with nearly 40 per cent of business reporting a lack of access to finance as a constraint on their business, the highest percentage since the global financial crisis.

The survey results will be unwelcome news for the Reserve Bank of Australia, which is counting on the construction sector to pick up in 2013 to offset a drag on the economy following the expected peak in the mining investment boom.

Master Builders Australia chief economist Peter Jones said the survey showed builders needed greater support from the RBA, which has cut the cash rate 1.75 percentage points since November 2011.

He believes further interest rate cuts are needed.

"Interest rate cuts over the past year appear to have failed to boost the confidence of new home buyers," he said.

"The Reserve Bank has pointed to the building industry to help boost the non-mining sectors of the economy, but this does not look likely unless macroeconomic policy becomes more accommodating."

Mr Jones also called on federal governments to do more to support the sector, through a short term increase to the first home-owners grant.

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