Australian Industry Group | Author
Published Dec 07, 2018 14:09
The construction index fell for a third consecutive month in November
The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI) declined by 1.9 points to 44.5 in November, signaling a third consecutive month of decline and the sharpest rate of contraction since February 2015 (readings below 50 indicate contraction in activity, with the distance from 50 indicating the strength of the decrease).
Ai Group Head of Policy, Peter Burn, said: "A further lift in infrastructure activity was not able to offset steeper falls in residential construction sub-sectors in November. Across the construction sector as a whole, activity, employment and new orders all fell in the month which was the third consecutive month of contraction in this important part of the economy. The apartment building sub-sector has only expanded in three of the past 16 months as it unwinds from historical highs. While there are clear positives in the sector – particularly in infrastructure – the industry and the broader economy has become more vulnerable to a broader slowdown. In this environment, the potential impacts of adverse tax changes on residential building need to be considered very carefully in the lead-up to the federal election," Dr Burn said.
HIA Acting Principal Economist, Geordan Murray, said: "The tightening in credit conditions initially hit the housing market back in 2017. The number of transactions started to ease and then prices began to fall. We are now clearly seeing the impact in construction activity. The index of the Australian PCI tracking house building activity has now been contracting for five consecutive months while the index tracking apartment building activity has been contracting for eight consecutive months. The softening in new home building activity only had a small role to play in this week’s disappointing GDP result. The contraction in new orders suggests that the drag on economic growth from falling levels of home building could become more significant over the year ahead," Mr Murray said.
Australian PCI – Key Findings for November:
Seasonally adjusted |
Index this month |
Change from last month |
12 month average |
Trend |
Index this month |
Change from last month |
12 month average |
Australian PCI® |
44.5 |
-1.9 |
52.0 |
House building |
40.1 |
-2.6 |
50.6 |
Activity |
41.6 |
-3.3 |
51.5 |
Apartments |
31.0 |
-2.3 |
43.2 |
Employment |
44.3 |
-3.7 |
52.1 |
Commercial |
47.0 |
-0.1 |
53.9 |
New Orders |
45.8 |
1.3 |
51.5 |
Engineering |
54.0 |
-1.2 |
55.5 |
Deliveries |
47.9 |
-3.0 |
53.9 |
||||
Input Prices |
73.1 |
0.7 |
77.0 |
||||
Selling Prices |
47.1 |
2.8 |
53.3 |
||||
Wages |
61.6 |
1.2 |
63.1 |
Capacity Utilisation (% - seasonally adjusted) |
74.3 |
-4.1 |
77.5 |
Results above 50 points indicate expansion. All indexes for sectors in the Australia PCI are reported in trend terms (Henderson 13-month filter).
Please click below to read the full report:
Written By: Australian Industry Group
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