Construction Sector Remains Down But Decline Slowing

The construction sector in Australia has experienced another decline on its 38th consecutive month. But analysts say, its drop is now on a decline.

The numbers from the Housing Industry Association Australian Performance of Construction Index show that it climbed to 4.6 points in July, closing at 44.1. Based on the reading index, any construction activity that falls below 50 is regarded as poor performing. With lower numbers, the speed of the decline is also greater.

Peter Burn, the director for the Ai Group said that construction activities in relation to the mining sector was not being considered for construction’s other sub-sectors. Mr. Burn notes, “While the house building sub-sector approached an expansion in activity, apartment-building slowed at a steeper pace and commercial construction was also slower in July.”

He further said, “The industry continues to face a tough and uncertain environment characterised by tight credit conditions, a lack of public sector building activity and subdued investor sentiment.”

“The further reduction in the cash rate announced yesterday will be welcomed by the construction industry and can be expected to exert a much needed favourable impact over the next few months.”

Harvey Dale of the Housing Industry Association said that many sectors are not benefiting from mining investments, even as this has driven the economy. Mr. Dale said that this could be very crucial to the growth and balance of the economy. “The latest Australian PCI update takes us in the right direction with an improving profile for detached housing and engineering construction providing encouragement, although both sectors are still in negative territory.”