This article is from the Australian Property Journal archive
CONSTRUCTION activity has dipped by 3.6 points to 40.2 points in January, according to the Australian Industry Group Australian Performance of Construction Index.
The Ai Group/HIA survey shows that this is the eighth consecutive month the index has been below the 50 point level which indicates a contraction in activity.
All four sub-sectors declined in the month, with significant falls across the apartment building (down 15.2 points) and engineering construction (down 19.6 points) sub-sectors.
Ai Group director public policy Dr Peter Burn said whilst flooding and bad weather conditions have caused project delays and stoppages, higher interest rates, caution on the part of home buyers and businesses and tight credit conditions continue to hamper growth.
“The immediate outlook for the sector is not encouraging with new orders continuing to fall albeit at a slower rate than in December.
“As the post-flood rebuilding task takes hold over coming months, the sector is likely to see a pick-up in activity in some regions. However, the nation-wide pick-up in construction will be moderated by the recent announced deferral of some major infrastructure projects,” Dr Burn said.
HIA senior economist Andrew Harvey said this is one of the weakest reports.
“Hopefully, if we can believe last week’s building approvals numbers, we may see the apartment index improve, but housing has now contracted for eight consecutive months,” he added.
The report shows new orders sub-index contracted although at a slower rate in January compared to December up 3.9 points to 40.9. Employment continued to decline in January due to on-going subdued demand, project stoppages and the need for businesses to reduce costs.
Harvey said new orders continue to fall in housing, apartments and non-residential construction.
“New home building activity is set to be considerably weaker in 2011 than was evident last year. In this environment, and given the considerable dwelling shortages that exist, it is unfortunate that policy support for housing is being wound back. Recent Federal Government amendments to housing policy, such as the capping of the National Rental Affordability Scheme are disappointing and represent a step in the wrong direction,” he concluded.
Australian Property Journal
