THE construction industry continued to expand in October for the fifth consecutive month, however the rate of growth has eased.
The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index fell 5.7 points to 53.4 in October.
The construction activity (down 3.0 points to 54.1), new orders (down 4.7 points to 52.5) and deliveries from suppliers (down 1.9 points to 59.0) sub-indexes all reflected the slower pace of growth across the sector.
House building activity was again robust, despite a slower rate of growth. The sector’s activity sub-index registered 57.3 points in October, a decline of 4.4 points from the nine-month high level of activity recorded in September.
Apartment building activity increased at a broadly unchanged (and solid) rate with the sector’s sub-index registering 60.4 points in October, just 0.1 point below September’s reading. It marked the fourth consecutive month of expansion.
Commercial construction activity moderated. The sector’s sub-index registered 51.8 points in October, a decline of 6.6 points from the solid activity level of the previous month. Engineering construction activity again contracted in October, and at a slightly steeper rate than in September. The sector’s activity sub-index decreased by 1.9 points to 46.4 points.
Ai Group director – public policy Peter Burn said with further growth in October, residential and commercial construction continued to lead the rebalancing of the economy away from the emphasis on mining investment that has been such a feature of domestic economic activity in recent years.
“However, the outlook slipped a notch or two last month with the pace of growth in activity and new orders easing in the residential and commercial construction sub-sectors and declining further in engineering construction. With official data showing housing loan approvals flat, construction businesses appear to have wound back the exuberance of recent months with only a marginal lift in employment levels in October,” he added.
Meanwhile new orders continued to expand in October, although it fell 4.7 points to 52.5.
New orders in the house building sector increased at a slower rate in October, with the subindex falling by 6.9 points in the month to 59.3 points, after picking up strongly in the previous month. Despite this moderation, October marked the seventh consecutive month of growth in new orders and indicates that housing demand is continuing to rise.
In the apartment building sector, the new orders sub-index fell by 9.1 points to 49.8 points. For the commercial construction sector, new orders continued to expand. However, the rate of growth moderated from September, with the sub-index falling by 7.5 points to 55.1 points.
In the engineering construction sector, the new orders sub-index fell further into negative territory, declining by 1.7 points to 47.3 points. This is the sector’s tenth consecutive month of contracting new orders, mainly due to reduced mining and related infrastructure construction.
Australian Property Journal
