Construction industry still in the red


The national construction industry remained in the red in February, although the rate of contraction eased, according to the latest industry data.

The Australian Industry Group Australian Performance of Construction Index (Australian PCI) in conjunction with the Housing Industry Association, was up 4.4 points to 44.6 over the previous month (readings below 50 indicate a contraction in activity).

A lift in new orders for engineering construction helped push the sub-sector activity up 13.3 points in February (although the sub-sector remained below 50). 

The rate of decline also eased in commercial construction and apartment construction.  However, ongoing consumer caution was evident in the reduction in activity in the house building sub-sector (down 3.1 points).

Australian Industry Group Director Public Policy, Peter Burn, said: "The weakness in the construction sector evident since mid-2010 continued in February. Nevertheless, apart from house building which continues to disappoint, there are some signs that activity in the other sub-sectors may improve in the months ahead. The expansion in activity recorded by engineering construction and the slowdown in the pace of decline of activity in apartment and commercial construction provide some encouragement. The forward-looking new orders indicator points to a similar pattern of improvement.

"The slump in activity in the housing sub-sector in February marked the ninth consecutive month of decline. The fall in housing new orders is particularly disappointing and suggests the slump may still have some way to run. The decision last week by the Reserve Bank to keep interest rates on hold for the time being may assist in lifting confidence in this area," Dr Burn said.

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