Construction continues boom in May

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The national construction industry recorded a 16th consecutive month in positive territory in last month, with house construction now taking the lead over apartments


Along with residential construction, engineering construction continues to expand, as it works its way through a very large pipeline of transport and other major infrastructure projects.

"The construction industry is busier than ever in 2018, with strong demand across most major segments of the market," Ai Group chief economist Julie Toth says. "Residential construction activity remains elevated but it is clearly slowing from recent peaks.

"Commercial construction growth is evening out, but forward orders and planning approvals suggest a stronger period of activity still lies ahead in this sector."

Across the four sub-sectors, house building (up 8.3 points to 58.6) and engineering construction (up 2.6 points to 55.8) were the major drivers of growth, while the pace of growth in commercial construction slowed significantly (down 11.4 points 52.6), the AI Group construction index (Australian PCI) shows.

Apartment building activity declined for the ninth time in the past 10 months, if at a slower rate (up 3.5 points to 46.8), following a cooling in new orders over the second half of 2017.

"The June update to the Australian PCI continues to highlight how the drivers of growth in construction activity are changing as the economic cycle rolls on," HIA senior economist Geordan Murray says. "The boom in apartment project commencements occurred back in 2016 and the peak level of construction activity owing to this spike has almost worked its way through the system.

"The apartment market is now in a contractionary phase but the level of activity remains high in a historic context. Detached house activity has been strong but relatively stable. The pace of expansion in this part of the market has been limited by the capacity to supply new residential lots.

"Throughout 2016 and 2017 there was a large number of off-the-plan sales in upcoming developments and this pipeline of off-the-plan sales should sustain an elevated level of home building over the year ahead as these developments progress."


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