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A sharper fall in engineering construction and continuing softness in housing construction has meant that the entire construction sector continued to contract in November.

The Ai Group and Housing Industry Association Performance of Construction Index (PCI) increased 0.7 points in the month, indicating a slightly slower rate of decline. The index rose to 46.6 points from 45.9 points in October.

A level below 50 points, however, indicates activity in the sector is winding down.

The biggest mover was engineering, which slipped for a second month in a row. The sub-index declined 2.9 points to 41.4 points in November.

The other three sub sectors improved their reading, but stayed below the 50 points level, indicating continuing contraction.

"While there is some encouragement in the form of transport infrastructure activity, in the south-east corner of the country, this is being overshadowed by the continuing decline of mining-related construction and the retreat of residential building," Ai Group head of policy Peter Burn said.

The retreat of the construction sector highlights the need for new sources of growth to emerge in the economy, he said.

HIA senior economist Shane Garrett said the contraction in both the detached house and apartment sides of the market is consistent with building approvals data as well as HIA's New Home Sales report, which all suggest that residential building activity is moving lower.

"Latest HIA forecasts anticipate that the decline in new dwelling starts will last into 2018," Mr Garrett said.

 
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