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A strong pick-up in house building and engineering construction has helped lift overall building activity for the first time in five months.

The Ai Group and Housing Industry Association Performance of Construction Index (PCI) rose 5.4 points to 53.1 points in February, from 47.7 points the previous month.

A level above 50 points indicates an expansion in activity in the sector.

The February reading was the highest since mid-2016, and the first expansion since September.

The house building sub-index lifted 10.7 points to 60.9 points, while engineering improved 11.1 points to 53.9 points.

“There was a healthy lift in new orders for house builders with some additional expansion experienced among engineering constructors,” Ai Group head of policy Peter Burn said.

The gains offset the decline in new orders in the apartment sub-sector and underwrote a solid lift in overall employment in the industry as businesses increased their capacity, he said.

Apartment building was the only sub-sector in the red, even though activity levels remain high by historical standards.

The apartment building sub-index slipped 0.4 points to 46.1 points, indicating continued contraction.

“The gem in today’s result – for manufacturers, suppliers, sub-contractors, builders and the many other market participants – is the relatively strong showing for detached housing,” HIA chief economist Harley Dale said.

He said the latest reading supports the view that new home construction activity will hold up quite well in the short term, after which there will be a marked decline in medium-to-high density construction.

Employment and deliveries subindexes improved in February, while activity rose 7.4 points to 54.7 points.

Input costs also jumped 10.5 points to 76.1 points, while wages were slightly higher.

 
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