Australian construction grows in September

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Australian construction has expanded for an eighth consecutive month, according to the latest Australian PCI results

September -PCI-results

The Ai Group/Housing Industry Australia Performance of Construction Index (Australian PCI) gave a reading of 54.7 points for September (readings above 50 indicate growth). The reading is actually 0.6 points down on August, indicating the rate of growth is slowing.

The Ai Group says infrastructure construction and free-standing house building were the big drivers of expansion in September, with the sector seeing jobs and wage growth.

"September saw a continuation of the healthy levels of overall construction activity that have prevailed for most of the year to date," Ai Group head of policy Peter Burn says.

"While apartment building is winding down and commercial construction was flat, both engineering construction and house building continued to grow relatively strongly in September. Construction sector employment lifted again and wages growth accelerated in the month.

"With new orders still on the rise for the sector as a whole, the outlook over the next few months is positive even though the indications are for further contraction in the apartment sub-sector," Burn adds.

The Housing Industry Australia indicated the downturn in apartment building was expected, but the rise in house construction was a welcome surprise.

"New apartment building has grown to unprecedented highs over the past five years and it is inevitable that we would see a retreat from these levels," HIA senior economist Shane Garrett says.

"The Australian PCI – which shows the lowest reading in almost a year – indicates a slowdown in apartment construction is now evident. Residential building has been cooling from record highs and is set to decline over the next couple of years so the expansion of detached house building market this month is a welcome reprieve."


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