The national construction industry continued to contract in June, an industry report shows.
The latest Australian Performance of Construction Index (PCI) came in at 39.5 (readings below 50 indicate a contraction in the industry with the distance from 50 indicative of the strength of the decline). There were some positive signs, however, with activity contracting at a slower rate in June with reports from survey respondents pointing to an uptake in new work in the month.
The lift in activity sub-indexes was most pronounced for the apartment, house building and commercial construction sub-sectors.
Engineering construction fell sharply (by 13 points to 27.5) signaling a further scaling back in the work pipeline in this sub-sector.
Australian Industry Group spokesman Dr Peter Burn said the residential trends were helpful.
“While the Australian PCI points to a continuation of contraction in the construction sector, there are early signs of a rebalancing with the pace of slowing easing markedly in the residential and commercial construction sub-sectors both in terms of activity and new orders,” Burn said.
“This is offsetting the slowing of activity and new orders in engineering construction as the expansion in new capacity in the mining sector is scaled back and in the absence of a significant pipeline of new infrastructure projects.
“There are two key factors that would help lock-in the rebalancing of the construction sector – a pick-up in household and business confidence and a commitment to a much-needed program of renewal of the nation’s infrastructure.”
Housing Industry Association chief economist Harley Dale said there was still a long way to go before the industry could talk about recovery.
Stay informed, daily
“This update underlines the fact that the industry has a long way to go before we are back in expansion mode,” Dale said.
“Indeed, it is over three years since growth was recorded in the construction industry.
“While the move in June is a step in the right direction, today’s figures emphasise the reality that the recovery is fragile; intervention from the RBA and government policy action will be important in ensuring that the level of residential construction activity will recover to levels high enough to provide for Australia’s long term housing needs.”
Want to see more stories from InDaily SA in your Google search results?
- Click here to set InDaily SA as a preferred source.
- Tick the box next to "InDaily SA". That's it.
