The growth opportunities are underpinned by the government’s expansionary fiscal spending and further progress in private and public sector projects, said MIDF Research.
In its economic brief today, the research house reiterated its forecast for the sector to expand stronger at 7.5% in 2023 (2022: 5%) on the back of better supply conditions.
It said growth in the sector, measured by construction work done, accelerated to 9.6% year-on-year (y-o-y), the fastest expansion in three quarters.
In October 2023, civil engineering works, which comprised 40.5% of the total construction output, recorded stronger growth of 17.1% y-o-y.
Moreover, construction work done in the residential sector and special trade activities both grew faster at 7.9% y-o-y and 16.2% y-o-y, respectively.
“The growth was partly weighed down by the 0.7% y-o-y contraction in non-residential construction, the first decline in seven quarters.
“At the same time, the public corporation recorded a strong rebound in total work done, surging to 25.6% y-o-y.
“This was mainly due to the completion of civil engineering works which contributed more than two-thirds of the overall construction output growth during the month,” MIDF said.
Output by the private sector also recorded positive growth, albeit at a more moderate pace of 8.6% y-o-y compared to 17.3% y-o-y in Q2 2023, due to softer expansion in residential construction and civil engineering works.
On the other hand, the amount of construction work done for government-owned projects declined 0.8% y-o-y, marking the first y-o-y drop after five quarters of growth.
The weaker growth was due to the higher base effect as the level of output in government projects actually rebounded to 6.4% month-on-month (m-o-m) in October, reversing from the 7.6% m-o-m decline in the previous month.
“Together with the 28% m-o-m surge in works done by the public corporations, the public sector output largely contributed to the stronger 3.4% quarter-on-quarter (q-o-q) rise from 0.4% q-o-q growth in Q2 2023, which more than offset the 4.2% q-o-q decline in private sector output,” it added.
According to the statistics department, the value of work done in Malaysia’s construction sector rose by 9.6% y-o-y to RM33.4 billion in Q3 2023, continuing its positive pace for the sixth consecutive quarter.