Construction declines at slower pace

18-01-2011

A boost in engineering construction helped slow the rate of contraction in the national construction industry in December according to the latest Australian Industry Group Australian Performance of Construction Index (Australian PCI) in conjunction with the Housing Industry Association. 

While lifting 1.6 points to 43.8, the seasonally adjusted index remained below 50 indicating a contraction in activity.

Stronger demand from the resources sector helped the engineering construction sub-sector expand for the first time in six months. 

It was the only major sub-sector to record growth in December with new orders and deliveries across construction falling at a faster rate.  Poor weather conditions and diminishing work from school building projects stifled activity.

Australian Industry Group Director Public Policy, Dr Peter Burn, said: "Despite a lift in engineering construction and reduced declines in activity in the residential and commercial construction sub-sectors, overall the construction industry was weaker to end a disappointing second half of 2010.

"The slower pace of decline in December is dampened by reports that new orders continue to fall in all four sub-sectors. Businesses and homebuyers continue to refrain from committing to new projects with expectations of further rises in interest rates a likely factor.

"The sluggish performance over the second half of the year would have been considerably worse in the absence of the continuing public sector stimulus of activity in the industry.  The industry is looking for a lift in private sector projects in the New Year to offset the ongoing withdrawal of that stimulus," Dr Burn said.

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