Australian Industry Group | Author
Published Apr 05, 2019 10:52
Australia's construction downturn continued in March
The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI) increased by 1.8 points to 45.6 in March, indicating a slight easing in the construction industry’s aggregate rate of contraction (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: "Australia's construction downturn continued in March, although there are some encouraging signs that the overall rate of contraction has eased. Activity fell at a slower pace at the end of Q3 – as more planned projects moved through to construction – while the decline in new orders also moderated slightly. Residential building conditions remain particularly subdued and commercial construction is continuing to detract from industry wide performance. However, after four months of decline, engineering construction stabilised in March amid reports of new project starts and an improvement in tender opportunities. Looking ahead, the construction industry is likely to remain in negative territory over coming months due to the ongoing fall being recorded in new orders. On the positive side, there is clearly capacity to lift construction activity if policy makers are looking to stimulate the slowing economy," Dr Burn said.
HIA Economist, Tom Devitt, said: "The contraction in Australian home building activity continues despite easing in recent months. Falling house prices impeded market confidence and the unanticipated credit squeeze combined to accelerate a decline in the market in the second half of 2018. The backlog of projects that have accumulated over the last few years will continue to sustain a relatively high level of activity. This strong pipeline of work is being worked down at present and this will continue unless there is an improvement in the amount of work entering the pipeline," Mr Devitt said.
Australian PCI – Key Findings for March:
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® |
45.6 |
1.8 |
48.3 |
House building |
35.8 |
0.1 |
44.0 |
Activity |
46.1 |
4.5 |
46.5 |
Apartments |
31.3 |
1.0 |
36.0 |
Employment |
46.1 |
0.1 |
48.7 |
Commercial |
41.9 |
-0.8 |
48.7 |
New Orders |
44.5 |
1.3 |
48.2 |
Engineering |
50.5 |
1.5 |
52.4 |
Supplier Deliveries |
45.8 |
0.4 |
51.1 |
||||
Input Prices |
63.7 |
-5.0 |
74.4 |
||||
Selling Prices |
41.4 |
0.7 |
48.2 |
||||
Average Wages |
59.2 |
-0.4 |
62.2 |
Capacity Utilisation (% - seasonally adjusted) |
76.5 |
1.0 |
76.3 |
Results above 50 points indicate expansion. All indexes for sectors in the Australia PCI are reported in trend terms (Henderson 13-month filter).
Written By: Australian Industry Group
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