Construction slowing down but still ahead of yearly average: Australia PCI
The Australian Industry Group/Housing Industry Association dropped 4.2 points in the month of December to 50.8 but is still indicating growth and is ahead of the average for the year of 43.9
According to the Australian Performance of Construction Index, house building remained the strongest performer at 63.5 and apartment building increased to 56.
“The Australian PCI effectively ‘paused for breath’ in December, easing its rate of growth after a strong march forward over the previous several months,” says Housing Industry Association chief economist Harley Dale.
“The key is that the index remained in expansionary territory,” says Dale.
Dale says detached housing still accounts for over 60% of new home building and has a substantial reach into Australia’s manufacturing sector.
“The on-going strength in apartment and house building sub-indices is pleasing to observe,” says Dale.
New orders, activity and deliveries from suppliers were all lower in December, recording 54.3, 50.7 and 48.3 respectively.
“In line with the easing of the mining investment boom, engineering construction was weaker in December and with further falls in store; the time is ripe for a much more decisive focus on building new and upgrading existing transport infrastructure,” says Australian Industry Group director public policy Peter Burn..
“Commercial construction, while only just in positive territory in December, is showing signs that the extended recession in this sector may be drawing to a close,” says Burn.
Employment tightened in the sector after two consecutive month of growth to 48.1.
“Low interest rates are clearly having their long-awaited impact and the continued growth of new orders means that builders – and the manufacturing and service industries that are linked to the commercial and residential construction sectors - can look forward to 2014 with a greater degree of confidence than prevailed only a few months ago,” says Burn.
The main constraints on house building activity continue to be tight credit conditions and a lack of public sector building activity.