Performance Construction Index shows first growth in 5 months


May 06, 2016 14:11:46

The Performance of Construction Index (PCI) compiled jointly by the Australian Industry Group (AIG) and Housing Industry Association (HIA) edged back into expansionary territory in April after four months of contraction.

The PCI reading of 50.8 was just above neutral, with any reading below 50 pointing to falling activity.

Engineering construction was the strongest performing sector, up 9.9 points to 54.6, its first growth in almost two years.

The higher activity was driven by transport and road building, particularly in New South Wales, and softened the impact of the downturn in mining and heavy industry investment.

Activity to remain down despite rate cuts

House building contracted for the third consecutive month, while apartment building also edged back.

Weaker forward orders over the past four months have been linked to an oversupplied market and tighter lending criteria for investors and point to sluggish conditions in the future.

Construction in the commercial sector — representing hotel, offices and retail building — also moved back into negative territory after two months of mild growth.

Employment grew in construction for the first time in three months, while overall wages growth remained subdued.

HIA economist Diwa Hopkins said while this week’s cut in interest rates would support healthy levels of construction in the near-to-medium term, activity was likely to remain below the record levels of last year.






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