Better business conditions and investor sentiment have pushed construction levels to a 12-year high with competitive tendering, building backlogs and a bump in new orders driving industry growth.

Construction grew at a record pace in July, courtesy of house building and commercial construction, to hit the highest level recorded in Ai Group’s Performance of Construction Index (PCI).

With an increasing volume of projects entering the pipeline, the record pick-up in commercial construction reflects firming investor sentiment and the nation’s stronger general business conditions, Ai Group said.

House building accelerated in July – the fastest in 42 months – thanks to a solid backlog of work and stronger demand.
Builders benefited from ongoing projects while some businesses suggested stamp duty reductions – effective from 1 July – increased first home buyer activity.

PCI respondents said the pick-up is due to improving demand flowing-through to new orders and an increase in tenders.
The acceleration in new orders and construction activity were among the strongest in the survey’s history.

Ai Group head of policy Peter Burn said deliveries, orders, wages and employment were all strong indicators of growth.

“The buoyancy of the sector is evident in strong levels of current activity and employment growth and growing order books,” Dr Burn said.

Since the Ai Group and the Housing Industry Association began releasing the PCI in September 2005, July’s 4.5 point rise to 60.5, is the fastest acceleration on record since the index was first taken amid the mining and construction boom in 2005.


By Christian Edwards