The ABS said the trend estimate for the value of all construction work done in the quarter was $35.4 billion, a 2.6% increase compared to the September quarter. Broken down into sectors, the trend estimate for residential building work was up 0.2% to $10.5 billion, while non-residential building work was up 0.5% to $7.6 billion. Engineering work done in the quarter was up 4.7% in the quarter, with a trend estimate of $17.1 billion.However, according to Master Builders Australia, the strong growth experienced by the industry over the past five years is set to change.MBA chief economist Peter Jones said the key to the outlook for the construction industry over the next two years will be whether an upswing in the residential sector can offset looming weakness in non-residential building and engineering activity as the previously strong pipeline of work begins to fall away.“The outlook for engineering construction will begin to turn in line with the fall in commodity prices, although a massive pipeline of resources-related work is yet to be done and state government infrastructure spending should cushion the fall,” Jones said. “The credit crunch is the issue for commercial builders being choked by tough lending criteria imposed by financial institutions,” he said. “Funding issues continue to threaten commercial building projects with softening market conditions to leave a significant hole in building activity.” For residential building, Jones said confidence was the missing link. “Once households believe that the economic situation has stabilised, a housing upswing will gather momentum,” he said. Jones said residential building faces another ratchet down in activity during the first half of 2009, but will be boosted by fiscal and monetary policy stimulus measures as the government attempts to recession-proof the economy amid the global financial crisis.The ABS said its data is comprised of estimates based on a response rate of about 80% of the value of both building and engineering work done during the quarter.