Business, Earthmoving News

Construction recovering in April: PCI Index

Construction activity is returning to normal with ongoing expansion in April

All sectors of the construction industry continued to improve across April, however the high rates of growth seen in previous months have started to ease, according to an industry performance index.

The Australian Performance of Construction Index (PCI), which is produced by the Australian Industry Group (Ai Group) and Housing Industry Association (HIA) each month, showed that growth was easing off most strongly in the commercial sector.

Ai Group says a continued escalation of input costs were affecting builders more severely in April, adding that the ramifications of this could be felt into the future.

Supply disruptions, input price increases and labour shortages are also hindering the sector, the report says.

The Australian Performance of Construction Index (PCI), which is produced by the Australian Industry Group (Ai Group) and Housing Industry Association (HIA) each month, eased slightly to 55.9 points in April.

Any measurement in the index above 50 suggests the industry is still expanding, while numbers below that mark indicate contraction.

The change is a 0.6-point month-on-month decrease on the PCI’s finding in March, as the industry continues in its return to normality this month.

Overall construction across April was still in a state of expansion in all four major sectors of the PCI, however that expansion was slightly less, with the figure down (-1.8 points) on the same figure from March.

Commercial activity saw the biggest decrease in activity, down 4.6 points to 54.5, while apartment activity (down 1.8 to 54.5), engineering activity (down 1.0 to 52.6) and housing activity (down 0.8 to 53.4) all dipped.

The number of new orders continued its encouraging rise however, lifting by 2.9 points to 58.6 – a figure largely driven by demand for commercial construction. Concerns about increased prices and the potential for interest rates to increase caused hesitation for customers pursuing house building endeavours.

The upward pressure on input prices continued to ease moderately, however the continued elevated results – now sitting at 94.4 following a 0.2 decrease – remains extremely raised.

On the other hand, selling prices eased considerably to continue their downward trajectory, sliding 4.1 to 81.1 points, despite the figure still representing 18 months of continued expansion.

Following March’s sharp rise in employment figures, the index regressed significantly by 5.1 points – however the index still remains strong at 61. Labour force shortages continues to impact the sector’s employment index, which has been volatile since mid-2021.

The wage index recorded nine consecutive months of elevated wage pressures, which has been expanding since August 2020. The figure rose by 1.3 points to finish at 77.9.

Send this to a friend