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QTPA Member Alert | Comment on the Australian Construction Industry for Your Reference (12/6/2012)

Comment on the Australian Construction Industry for Your Reference

Construction Industry Now Two Years in the Red
The national construction industry recorded its 24th consecutive month of contraction in May 2012, with the Ai Group Australian Performance of Construction Index (Australian PCI®), prepared in conjunction with the Housing Industry Association, dropping 0.2 points to 34.7 (readings below 50 indicate a contraction in activity with the distance from 50 indicative of the strength of the decrease).

By sector, commercial construction registered the sharpest fall in more than three years, coinciding with a further weakening in new orders, while house and apartment building activity continued to contract substantially. Despite declining in the month, engineering construction contracted at the slowest rate, reflecting the strength of resource-related projects.

“While May and June’s RBA cash rate cuts are very welcome and will help to improve sentiment among home builders and investors, it will take some time for this benefit to flow through to actual construction activity levels,” said Ai Group Chief Economist, Julie Toth. “In the meantime, the forward indicators such as building and credit application approvals all point to a further period of extended weakness in construction activity levels.”


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