Australian Construction Grows Again

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Wednesday, October 7th, 2015
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Construction activity has expanded for a second consecutive month, with residential building offsetting the struggling commercial and engineering sub-sectors.

The Performance of Construction Index dropped slightly by 1.9 points to 51.9 to remain above the 50-point level separating expansion from contraction.

The slight easing in the pace of growth comes after the construction industry index rose for the first time this year in August, according to figures from the Australian Industry Group and Housing Industry Association.

Ai Group head of public policy Peter Burn said strong residential building activity held the overall sector afloat in September.

Apartment building activity expanded at its fastest rate in more than a year, while house building achieved an 11-month high in its rate of expansion.

“(This overshadowed) a fall in commercial construction and further contraction in the engineering construction sub-sector,” Mr Burn said.

While new orders for engineering work signalled further falls in mining-related construction, new orders for house, apartment and commercial building got a boost in September, the report said.

HIA economist Diwa Hopkins said residential activity remained the foundation of the broader industry, a theme which will continue at least until the first half of 2016.

“There are some tentative signs of improvement emerging from the commercial sub-sector of construction, but these are yet to be sustained,” she said.

August’s lift in the commercial construction activity sub-index evaporated in September, tumbling 6.5 points to 48.1.

“Nevertheless, new orders for this segment of the market are rising which suggests a recovery may emerge in the new year,” Ms Hopkins said.

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