This section reports on our recent forecasting track record. The forecasts of construction activity that were published on this web-site in November 2007 are compared with outcomes for construction activity that have been published subsequently by the ABS. These outcomes are for the September and December quarters of 2007. Monitoring our track record helps identify strengths and weaknesses in the forecasting process that can be used in continuously improving that process.

Non-Residential Building

In November 2007, we forecast non-residential building to rise by 9 per cent in the September and December quarters of 2007 (compared to the September and December quarters of 2006). Actual data shows a slightly stronger rise in non-residential building of 13 per cent, over the same time period.

The largest type of non-residential building is office building. For the second half of 2007, we forecast that office building would rise by 17 per cent. The actual data shows an even stronger rise of 27 per cent for office building. This result for office building was due to stronger-than-expected office building activity in Melbourne and Perth. Health and aged care building also increased by more than expected. In November, we forecast that health and aged care building would rise by 13 per cent in the second half of 2007, but it rose by 20 per cent. This was due to the commencement of some large health projects.

Residential Building

In November 2007, we forecast residential building to grow by 4 per cent in the September and December quarters of 2007 (compared to September and December of 2006). Actual data shows that residential building was stronger than forecast, growing by 7 per cent.

For the September and December quarters of 2007, we forecast that new houses would grow by 10 per cent. The actual data shows that new house building was weaker, rising by only 7 per cent in the second half of 2007. Over the same period, we forecast that new other residential building (units, etc) would fall by 2 per cent. This forecast was reflected in the actual data, which shows a 2 per cent fall in the second half of 2007. Small alterations and additions were forecast to rise by only 2 per cent, but actual data shows a rise of 11 per cent. This was the main contributor to the underestimation of total residential building.

Engineering Construction

In November 2007, we forecast total engineering construction to be strong in the second half of 2007 (compared with the second half of 2006) with a rise of 23 per cent. Actual data also shows a solid rise in total engineering construction of 15 per cent.

In the second half of 2007, we forecast a large increase in road construction of 7 per cent. The commencement of the Monash-City Link-West Gate Upgrade in Victoria (valued at around $1 billion) was factored into this forecast of road construction. The actual data shows a weaker increase in road construction of 2 per cent. This is partly because the commencement of the Monash-City Link-West Gate Upgrade does not appear as a spike in Victorian road construction in the ABS historical data. In the second half of 2007, we forecast the water and sewerage construction would rise by a very strong 71 per cent. Actual data shows an even stronger rise of 134 per cent due to the commencement of large projects. Further, in the second half of 2007, we forecast heavy industry (including mining) construction to rise by 16 per cent. This forecast was very close to the outcome of 13 per cent growth in heavy industry construction.

Growth Forecasts for 2008-09

	Forecast made in Nov 2007	Forecast made in May 2008
Non-residential building	6%	3%
Residential building	9%	5%
Engineering construction	7%	15%