Australian Construction Industry Hails Return to Growth 1

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Thursday, November 7th, 2013
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The building and construction industry in Australia has celebrated its first month of expansion in more than three years as activity throughout the sector has shot up not just in the residential sector but also across the board.

The building and construction industry in Australia has celebrated its first month of expansion in more than three years as activity throughout the sector has shot up not just in the residential sector but also across the board.

In October, the Australian Industry Group/Housing Industry Association Performance of Construction Index jumped 6.8 points to come in at 54.4 – passing the critical 50.0 mark which separates improving industry conditions from deteriorating conditions for the first time since mid-2010.

Better yet, whilst the results were primarily driven by a surge in both apartments and house building, expansion was also recorded in the commercial and engineering sectors.

Almost all positive indicators including activity, new orders and employment rose for the first time in years – employment throughout the sector expanded for the first time in forty months.

Even selling prices, which have been in freefall for years, almost returned to growth. This indicates profit margin pressures on the sector may finally be receding.

Construction industry rises

Building industry economists hailed the latest data, which follow other data showing new home sales at two year highs and residential building approvals at three year highs.

Housing Industry Association Chief Economist Harley Dale says the return to positive results as a ‘milestone moment’.

“The indications in recent months have been that this outcome was achievable, but there was a false dawn earlier in the year so this confirmation is heartening news for the construction sector” Dale says.

“It will be important for recent gains in the Australian PCI® to be maintained and built upon, but the results of recent months have certainly been very pleasing to observe.”

Australian Industry Group Director of Public Policy Peter Burn says the latest data is a ‘welcome indication’ the industry ‘could be on the cusp of a long-awaited recovery’.

sector rises

Key Findings:

Key findings of the report, as summarised by the HIA and AIG in a joint statement, are as follows:

  • After almost three and half years in contraction – the Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI®) expanded in October lifting 6.8 points to 54.4.
  • Across the sub-sectors: both apartments (66.2) and house building (65.3) expanded at higher rates while commercial construction (52.6) and engineering construction (52.7) returned to growth.
  • Overall construction activity lifted 5.4 points to 57.3.
  • New orders across the sector were stronger at 54.3 – reflecting the activity improvements across all subsectors.
  • After 40 months of decline, employment increased to 52.5 in October.
  • Selling prices continued to decline, although at a slower rate (48.9).
  • The increase in input prices was stronger in October (72.1).
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  1. Geoff Cuff

    It is about time some improvement is now showing, lets hope it still goes up