Construction industry contracts for 22nd straight month in March due to weak residential sector: AIG/HIA

Larry SchlesingerDecember 8, 2020

The construction sector contracted for the 22nd consecutive month in March, with particular weakness in the residential sector, according to the latest Australian Industry Group Performance of Construction Index released in conjunction with the Housing Industry Association (HIA). 

The last time construction was expanding was in May 2010. 

While the index rose slightly by 0.6 points to 36.2 it still remains well below the 50-point mark, which separates a contracting sector from an expanding sector.

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House building activity declined further in the month with the sector’s sub-index falling by 7.6 points to 30.3 to signal the sharpest pace of decline since September last year. 

Apartment building activity also remained weak, with the sector’s sub-index falling by 3.9 points to 30.5, the steepest rate of decline recorded by the sector in the past four months. 

New orders in house building continued to decline with a sub-index reading of 28.5, which was 4.8 points below the level in February and the weakest reading in six months. 

Commercial construction was again subdued with a sub-index reading of 35.5 but that was up by 9.2 points on the previous month, an early indicator that more projects are starting to receive the go-ahead. 

In March poor demand and subdued workloads resulted in businesses again reducing their employment. 

As a result the activity and capacity sub-index increased by 2.5 points to 35.5 points. 

Reduction in the commercial construction sector moderated in March after a sharp fall in February.

 

 

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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