Construction industry on the rise

09-06-2010

The construction industry remained in the black for the third consecutive month in May, although the pace of growth eased slightly as operating conditions become more difficult. 

The latest seasonally adjusted Australian Industry Group/Housing Industry Association Performance of Construction Index (Australian PCI) was 53.2 in May, down 2.6 points but still above the 50 point level indicating an expansion in activity.

House building experienced the strongest conditions with a lift in new orders and increased investor activity. This was in stark contrast to the apartment building sub-sector which recorded a sharp decline in May with the sub-sector index down 16.8 points.

Australian Industry Group Director Public Policy, Dr Peter Burn, said: "The continued expansion of the construction sector as a whole and the ongoing growth of new orders in housing, engineering construction and commercial construction are positive signs that the recovery in the sector is gaining traction following the difficulties of the past couple of years. The increased pace of input deliveries and the growth of employment suggest that businesses are taking a more positive near-term outlook.

"However, there is some cause for caution in the May Australian PCI.  The volatile apartment sub-sector underperformed in May and there is a continuation of the weakness of new orders in this area evident since January. Activity in apartment and engineering construction slumped in May and the pace of growth in commercial construction activity that we saw in April was not maintained," Dr Burn said.

Housing Industry Association Senior Economist, Ben Phillips, said: "The continued strength for home building activity is a positive for the industry, however, the industry remains concerned about a likely downturn once government stimulus has run its course.

"The apartment segment continues to underperform highlighting the fragile nature of this credit constrained market," Mr Phillips said.

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