This article is from the Australian Property Journal archive
THE national construction industry has continued to fall in April, according to the latest Australian PCI index.
The Australian Industry Group – Housing Industry Association index fell 5.1 points last month to 42.6 points, below the critical 50.0 points level separating expansion from contraction.
Ai Group’s associate director of economics and research Tony Pensabene said the index confirms that weakness in the construction industry has intensified, as tightening monetary and credit conditions weigh more heavily on activity levels.
For the industry as a whole, activity and new orders posted larger declines in April. This resulted in a reduction in employment levels, following growth over the six previous months.
In addition, the rate of input cost increases remained high in April, despite a slight moderation in the pace of growth.
Declines in activity were broadly based across all four construction sectors monitored, with the pace of contraction in the apartment sector increasing, commercial construction falling for a second straight month, and engineering activity declining markedly, albeit from a solid base.
Pensabene said underlying April’s reduction in total activity was a fall-off in project work on a broad industry front with firms commenting that subdued market demand had led to increased competition for tenders.
“Of concern, new orders are now at their lowest level in 20 months, which means that the current weakness in activity is likely to persist during the months ahead.” he added.
HIA’s chief economist Harley Dale said the April result is a very negative update on the Australian residential sector.
“The April Australian PCI result reinforces what we have seen from a range of indicators in recent months. That is, a significant deterioration in housing conditions over the first quarter of 2008,” Dale concluded.
Australian Property Journal
