This article is from the Australian Property Journal archive
A FALL in demand and employment growth has contributed to construction activity falling in February.
According to the Australian PCI index, the seasonally adjusted index declined 4.9 points to 52.8, which remains above the critical 50 point level.
The industry was dragged down by the volatile apartment sector which fell 16.4 points to 42.7.
This was followed by commercial construction which fell 9.5 points to 50.4.
House building recorded growth for the eighth straight month, albeit at a slower rate, with the sub-index decreasing by 2.1 points to 61.6.
New orders in the house building sector rose for the sixth consecutive month, the sub index reaching 61.7. Customer enquiries and buyer confidence remained resilient in the month.
Engineering construction activity also recorded a second consecutive month of growth, although the pace of increase eased, the sub-index declined 2.1 points to 54.9. This coincided with firms recording a slightly higher rate of decline in new orders during the month.
The employment sub-index fell 8.0 points but remained in positive territory, 51.1 for the month.
Australian Industry Group director of public policy Dr Peter Burn said while activity contracted in the volatile apartment sector, the engineering, commercial and house building sectors all reported another month of growth.
“The house building sector, in particular, experienced solid conditions, in line with official data showing a continued increase in approvals for detached houses. The survey points to housing activity holding up over coming months with firms reporting a further improvement in their order books and the emerging signs of an increase in investor activity.
“The key concern is that higher interest rates and, in particular, the clear risk of further increases, will pull back growth in coming months,” Dr Burn said.
Housing Industry Association senior economist Ben Phillips said the continued expansion of detached housing is further evidence of recovery in that sector.
“The poor showing of the apartments sector is indicative of continued credit issues in the sector. A broad-based housing recovery will not be complete until the volatile units market consistently stays in expansionary territory,” Phillips concluded.
Australian Property Journal
