Australia's Construction Activity Slowed in April

Australia’s construction sector expanded again last month despite the pace of growth easing from March.

It marks the 15th consecutive month of growth according to the latest Australian Performance of Construction Index. The index, run by the Australian Industry Group and the Housing Industry Association, indicated that healthy infrastructure and house-building sectors offset weak apartment construction.

The national composite index takes its scores on a weighted mix of activity, orders and new business, deliveries and employment in the sector. Readings above 50 points indicate construction activity is “generally expanding”, while a mark below 50 represents a decline. The greater the distance from 50 on the Australian PCI, the stronger the increase in activity.

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Growth in April was largely due to commercial construction which was the strongest performing sub-sector in April, ranking 64.0 on the index. Ongoing support from state government capital works also nurtured a strong index number for engineering construction, which expanded at a slower rate to 53.2.

In the residential sub-sectors house building activity was stable in April, down 2.3 points to 50.3 (its lowest reading in 11 months), while apartment building weakened further to 43.3, down 6.6 points on the index.

In the residential sub-sectors house building activity slipped to its lowest reading at 11 months, down 2.3 points to 50.3. Apartment building weakened further to 43.3, down 6.6 points on the index.

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HIA senior economist Geordan Murray said the Australian PCI illustrated divergent conditions affecting the various parts of the nation's construction industry.

“The engineering construction sector has endured the downturn in mining-related activity and is now benefiting from the boom in public sector investment in transport infrastructure.”

Ai Group head of policy Peter Burn said while Australia's construction sector continued to expand in April, there were suggestions of an easing in conditions.

“April saw a moderation in both activity and new orders growth, although businesses continued to increase their employment levels in a strong sign of an industry still confident in its overall near-term outlook.

“A growing pipeline of major project work saw strongest growth in the commercial and engineering construction sectors,” Burn said.

“In contrast, the retreat in apartment building is continuing while the housing sector stabilised in the month – consistent with building approvals data which are below their peaks and continue to point to a cooling in housing construction.”