Construction activity returns to growth
After 18 months of declining construction activity, Australia’s national construction activity returned to growth in September, according to Australian Industry Group/Housing Industry Association Performance of Construction Index. The growth was largely driven by stronger demand in the housing building sector.
The measure, known as the Australian PCI, rose 8.4 points to 50.8. A measure of 50 is regarded as the cut-off between contraction and expansion.
Looking to the reasons for growth, the industry body said low interest rates, combined with the first homeowners grant was a key driver for the positive result.
It was the third consecutive month of growth in free-standing home construction.
Rather ominously interest rates moved off 49-year lows yesterday, while the extended homeowners grant finished last week.
Across sectors, apartment, engineering and commercial construction sectors remained under pressure.
The Australian Industry Group associate director, Economics and Research, Tony Pensabene, said that despite the good result the sector remained volatile.
”Industry conditions remain tough overall with companies facing intense competition to secure new contracts amid the on-going difficulties of tight credit conditions and poor investor sentiment,” Mr Pensabene said.
”While this persists, growth will be held back and conditions are likely to remain fragile."
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