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Construction Maintains Moderate Growth Despite Shortages

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The construction sector has maintained its moderate pace of growth off the back of easing Covid restrictions despite ongoing material and labour shortages.

The Australian Industry Group and HIA Australian Performance of Construction Index eased by 0.6 points to 57.0 points in November 2021 following a strong rebound in September.

Australian Industry Group chief policy advisor Peter Burn said there had been strong growth in engineering construction and commercial building activity in November.

“With new orders having recovered from the slump in the September quarter, the construction industry is set to close 2021 by making a strong contribution to the rebound of the broader economy,” Burn said.

“Across the construction industry, the breakneck pace of expansion seen in October eased to more sustainable levels; employment picked up further; and the inflow of new orders continued to accelerate at a level that, if maintained, will strain capacity.

“Apartment building also expanded while the house building sector reported a decline in activity.”

Performance of Construction Index

Construction SectorPCI scoreMonthly changeAnnual average
Housing46.6-5.356.6
Apartments56.3-847.7
Commercial68.86.353.7
Engineering66.7-10.256.2

^Source: PCI November

Burn said the construction industry was pushed to meet demand due to difficulties filling vacant positions, and ongoing supply constraints continuing to plague the sector.

HIA economist Tom Devitt said the housing construction activity had bounced back after the end of lockdowns.

“Now with HomeBuilder clearly in the rear-view mirror, it is a shift in consumer preferences that continues to drive demand for new houses,” Devitt said.

“This will support new house building activity on the ground, and associated employment, throughout 2022.

“The apartment market is also strengthening … investors are looking through the haze of the pandemic, and affordability concerns in the detached market are helping bring people to medium-to-higher-density housing.”

Apartment building activity was down eight points to 56.3, commercial building increased 6.3 points to a high of 68.8, and housing building fell intro contraction territory with a score of 46.6.

The PCI also tracks input prices, which indicated ongoing upward pressure for high prices from suppliers and importers remaining a concern for builders, now at a high of 97.5.

Skilled labour shortages have continued to trouble the industry as builders scrabble to find staff.

PCI results above 50 points indicate expansion, with higher results indicating a stronger pace of expansion.

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Article originally posted at: https://www.theurbandeveloper.com/articles/construction-index-growth-moderates-november