This article is from the Australian Property Journal archive
THE construction sector has recorded its sharpest fall in 12 months, down 1.3 points in September to 30.9 points, according to the latest Australian Industry Group Australian Performance of Construction Index.
All major sub-sectors recorded declines in activity in the month with apartment (26.0) and house building (28.5) the two weakest performers.
Commercial construction dropped 4.4 points to 29.6 and engineering construction declined 3.0 points to 32.7.
Subdued demand saw the new orders sub-index fall to (29.1), which marks the 28-month in a row, the sub-index has been in decline. The most pronounced drop in new orders activity was in house building (24.8).
Ai Group chief economist Julie Toth said September continues to show that the capital-intensive activity under way at present in mining-related engineering construction work in some states is simply not filling the gap left by the severe national downturn in residential and commercial construction.
“This is particularly apparent in the new orders and employment measures, which are yet to show a meaningful turning point but which should hopefully be supported by this week’s welcome rate cut decision. This cyclical downturn in building activity is having major knock-on effects for other industries, up and down the construction and housing supply chains,” she added.
HIA chief economist Harley Dale said the index provides further evidence that residential construction is the weakest sector of the Australian economy, with the commercial arm not far behind.
“Of most concern is that an update for the end of the September 2012 quarter is showing the sharpest rate of contraction in construction for 12 months. This finding comes against a backdrop of new residential construction activity already falling back to a recessionary level last financial year and provides a sombre account of the short term prospects for the domestic economy,” Dale said.
Property Review
