A December surge in resource-related engineering projects has helped stem the decline in the nation's construction sector, according to figures released by the Australian Industry Group (AI Group).

 

AI Group's Australian Performance of Construction Index, released in conjunction with the Housing Industry Association, increased by 1.4 points to 41.0 in December, although it remained below the 50 point level separating expansion from contraction for the 19th consecutive month..

 

"The broader multi-speed economy phenomenon is playing out within the Australian construction industry with a clear divide between the expanding engineering construction sub-sector and the still-contracting commercial and residential construction sub-sectors," AI Group Director Public Policy Peter Burn said.

 

Housing Industry Association Chief Economist, Harley Dale, said: "A less marked rate of contraction in the national construction industry in December 2011 should in no way disguise the very weak residential and non-residential building conditions. The Australian PCI® has now contracted for nineteen consecutive months. 

"A more marked rate of contraction for house building is an especially concerning update for the end of 2011, and the same outcome is evident for the employment sub index of the Australian PCI®. There is a clear need not only for further interest rate relief but also for government action in terms of both shorter-term stimulatory measures and a re-invigorated plan for policy reform," Mr Dale said. 

Australian PCI® Key Findings for December:

  • The Australian Performance of Construction Index (Australian PCI®) in conjunction with the Housing Industry Association lifted 1.4 points to 41.0 in December (readings below 50 indicate a contraction in activity).
  • The easing in the rate of decline was largely attributed to the boost in engineering construction (51.3) thanks to increasing work from the resource sector. 
  • While commercial construction (32.8) and apartment building (33.3) declined at a slower rate in December, house building fell 5.7 points to 32.9. 
  • Tight credit conditions, a lack of new tender opportunities together with strong competition for existing work hampered growth in the month. 
  • New orders declined for the 19th consecutive month (42.5) although the pace of decline was slower. 
  • Employment continued to fall at a marked rate while wages grew at a faster rate, up 1.8 points to 60.1.

Download the full December 2011 Australian PCI®