Residential Construction Activity Bounces Back, Commercial Lags

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Thursday, April 9th, 2015
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The construction sector activity has risen for the first time in five months, helped by a surge in apartment block building.

The Australian Industry Group/Housing Industry Association Performance of Construction Index rose 6.2 points to 50.1 points in March, barely scraping past the 50-level separating expansion from contraction.

HIA senior economist Shane Garrett said residential construction was the only area of the domestic economy enjoying significant growth of late.

“It is, therefore, important that new home building activity does not end up being stifled by the unhelpful policy settings in place,” he said.

“In this regard, the Reserve Bank’s decision not to reduce interest rates this week adds to uncertainty across the economy and represents a lost opportunity.”

Ai Group director of public policy Peter Burn said the largest increase in home building activity since October had driven the return to growth for the construction sector.

“The lift in these residential construction sub-sectors from already healthy levels more than compensated for a steeper fall in engineering construction,” he said.

“While new orders for residential construction look positive for the near term, the time is now ripe for higher levels of investment in commercial construction and, particularly, in infrastructure.”

Commercial construction activity fell at a much slower pace in March, while engineering construction fell for the 15th month in a row, which corresponds with the fall in mining investment and the large drop in commodity prices, the report said.

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