The country’s construction sector has fallen the sharpest rate in the last 12 months in September, according to the Australian Industry Group’s (AI Group) and Housing Industry Association’s (HIA) Australian Performance of Construction Index (Australian PCI).

 

The Index dropped by 1.3 points in September to finish in at 30.9, where any figure below 50 represents a decline and the distance from the 50 mark is indicative of the rate of decline.

 

All major sub-sectors recorded declines in activity in the month with apartment (26.0) and house building (28.5) the two weakest performers. The new orders sub-index was down across construction (29.1) with the index having now been in decline for 28 consecutive months.

 

“This month's Australian PCI® continues to show that the capital-intensive activity under way at present in mining-related engineering construction work in some states is simply not filling the gap left by the severe national downturn in residential and commercial construction,” AI Group’s Chief Economist Julie Toth said.

 

“This is particularly apparent in the new orders and employment measures, which are yet to show a meaningful turning point but which should hopefully be supported by this week's welcome rate cut decision.”

 

The key findings for September are:

  • The latest Australian Industry Group Australian Performance of Construction Index (Australian PCI®), in conjunction with the Housing Industry Association, was down 1.3 points to 30.9 in September (readings below 50 indicate a contraction in activity with the distance from 50 indicative of the strength of the decrease).
  • The Australian PCI® has now been in negative territory for more than two straight years.
  • Across construction: house building fell by 3.0 points to 28.5, commercial construction dropped 4.4 points to 29.6, apartment building was up 3.9 points to 26.0 and engineering construction lost 3.0 points to 32.7.
  • Subdued demand, low consumer confidence together with a decrease in public spending on infrastructure was among the factors which weighed heavily on activity.
  • New orders contracted for the 28th consecutive month - the most pronounced drop in new orders activity was in house building (24.8).
  • Input prices remained high in September (68.3) while selling prices (35.9) continued to decline.

 

The full report can be found here