Construction falls at steeper rate in April

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The Australian construction industry has continued its contraction at an increased rate according to the latest Australian Performance of Construction Index (Australian PCI).

PCI-April-2019

The survey, compiled monthly by the Ai Group and Housing Industry Association (HIA), gave an overall reading for April of 42.6 points (readings below 50 indicate market contraction) which represents a drop of 3.0 points on March’s figures.

Although the industry has seen recent growth in engineering construction projects, it is still being weighed down by contraction in housing, apartments and commercial construction projects.

"The downturn in the overall construction industry worsened in April as the Australian PCI dropped to 42.6 points in the month," Ai Group head of policy Peter Burn says.

"The housing and apartment sectors both remain firmly in negative territory and commercial construction recorded a ninth month of contraction. Weakness in these sectors was partially offset by an expansion in engineering construction in line with reports of more planned infrastructure projects moving into the construction phase.

"Although engineering construction is likely to remain an area of relative strength for the industry on the back of spending on large-scale, long-term publicly funded infrastructure projects, there is little sign of any near-term improvement in overall industry conditions," Burn adds.

HIA economist Tom Devitt shared the bleak outlook, adding that a drop in house prices as well as recent government tightening of lending regulations were both contributing to the downturn.

"The home building industry remains in a delicate position," Devitt says.

"Tighter lending conditions and weak consumer confidence, due to falling house prices, continue to constrain the market. The home building pipeline is shrinking as the number of new home approvals slows."

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