The fall in new business has seen activity in Australia?s construction sector deteriorate in January, according to the Australian Industry Group ? Housing Industry Association Performance of Construction Index.
The Australian PCI index fell 3.7 points to 48.4 points in January.
Of the sectors surveyed, only commercial construction picked up in January.
The house building and apartment sectors remained in decline, while work on engineering construction projects fell for the first time since April 2006.
The January Australian PCI result follows moderate growth in total construction activity recorded in December 2006.
HIA’s executive director of housing and economics Simon Tennent said for housing, the combined effect of the three interest rate rises of 2006 had taken the wind out of the sails for Australia’s builders.
In addition, a number of residential builders continued to cite the negative influences on demand of interest rate uncertainty, low housing affordability and land supply shortages.
"It is hoped, however, that with the inflation cycle now easing, and with house prices still edging up and rental markets tightening, housing demand will return in 2007." Tennent said.
Ai Group’s associate director of economic and research Tony Pensabene said the fall in new business is consistent with reports by companies of a decline in customer enquiries and fewer invitations to tender.
"With new orders having now fallen for four straight months, weakness in the industry is set to continue, pushing any recovery out to at least the second half of 2007.
"On top of this, interest rate uncertainty, low housing affordability and land supply shortages are among the factors having negative influences on demand. Under these conditions, industry needs stability in the interest rate environment," Pensabene said.
Australian Property Journal
