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Construction activity has ended four straight months of contraction, swinging sharply to expansion in August.

The Australian Industry Group and Housing Industry Association’s Performance of Construction Index rose 6.7 points to 53.8 in the month.

The result compared to July’s reading of 47.1, which was a rise of 0.7 points on June.

August’s result puts the index well above 50 points — the level that separates expansion from contraction.

It’s the highest reading for the index since it reached 59.1 points in September 2014.

The index had been below 50 since a strong one-off bounce in March lifted the reading to 50.1, and had been in contraction territory in eight of the past nine months.

Ai Group head of public policy Peter Burn put the rise down to ongoing strength in residential building and a pick-up in commercial construction.

“The positive news from these sub-sectors was sufficiently strong to outweigh the entrenched contraction in engineering construction associated with the winding down in mining-related projects,” he said.

 
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