The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI®) remained in growth territory by a nose in December - down 4.4 points to 50.8 (readings above 50 indicate an expansion in activity).
After two months of strong growth, December signalled a slower pace of expansion but was well ahead of the average for the year (43.9). New orders (54.3), activity (50.7) and deliveries from suppliers (48.3) were all lower in the month.
House building recorded the second highest rate of expansion since the survey's inception in September 2005 rising 1.5 points to 63.5. Commercial construction (50.8) and apartments (56.0) also remained in the black while engineering (46.1) slipped back into negative territory.
Australian Industry Group Director, Public Policy, Peter Burn, said: "The recent spurt of growth in residential construction continued in December with ongoing strength in both apartment and house building activity. In line with the easing of the mining investment boom, engineering construction was weaker in December and with further falls in store; the time is ripe for a much more decisive focus on building new and upgrading existing transport infrastructure. Commercial construction, while only just in positive territory in December, is showing signs that the extended recession in this sector may be drawing to a close. Low interest rates are clearly having their long-awaited impact and the continued growth of new orders means that builders - and the manufacturing and service industries that are linked to the commercial and residential construction sectors - can look forward to 2014 with a greater degree of confidence than prevailed only a few months ago," Dr Burn said.
Housing Industry Association Chief Economist, Harley Dale, said: "The Australian PCI® effectively 'paused for breath' in December, easing its rate of growth after a strong march forward over the previous several months. The key is that the index remained in expansionary territory. Four months of such expansion, following as it does years of contraction, is an important tick in the box for Australia's growth prospects in 2014 given the position of the Australian PCI® as a key leading indicator of Australia's construction activity. The on-going strength in apartment and house building sub-indices is pleasing to observe. Detached housing, for example, still accounts for over 60 per cent of new home building and has a substantial 'reach' into Australia's manufacturing sector," Mr Dale said.
Australian PCI® Key Findings for December:
- The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI®) was still expanding in December albeit at a slower rate - down 4.4 points to 50.8 (readings above 50 indicate an expansion in activity).
- House building remained the strongest performer - 63.5 and growth in apartment building also remained healthy at 56.0.
- New orders were in positive territory (58.6) again in December with positive contributions in each of the four sub-sectors.
- Employment contracted following two consecutive months of growth (48.1).
- The selling prices sub-index moved above 50 for the first time since October 2010 with a sharp lift of 10 points to 54.9.
- Input prices remained high - 66.7.
- Reports from house builders suggests that customer enquiries and buyer confidence remains solid despite slower uptake of new orders. The main constraints on activity continue to be tight credit conditions and a lack of public sector building activity.
