7 August 2013 — The national construction industry continued to decline in July, albeit at a slower pace, with the seasonally adjusted Australian Industry Group/Housing Industry Association Australian Performance of Construction Index up by 4.6 points to 44.1 in the month (readings below 50 indicate a contraction in activity).

The easing in the rate of contraction was driven by less pronounced falls in new orders, activity and employment. Notably, the contraction in new orders was the slowest in almost two-and-a-half years.

Australian Industry Group director public policy Peter Burn, said: “To date there is only mixed evidence of a pick-up in the construction sub-sectors that will be required to offset the fading of mining-related construction activity. While the house building sub-sector approached an expansion in activity, apartment building slowed at a steeper pace and commercial construction was also slower in July. New orders continue to contract across the industry although the pace of contraction eased noticeably in the house-building and engineering construction sub-sectors.

“The industry continues to face a tough and uncertain environment characterised by tight credit conditions, a lack of public sector building activity and subdued investor sentiment. The further reduction in the cash rate announced yesterday will be welcomed by the construction industry and can be expected to exert a much-needed favourable impact over the next few months,” he said.

Key findings:

  • Overall construction activity was up 2.2 points to 43.6 in July, indicating a further moderation in activity
  • The house building activity sub-index rose by 7.0 points to 49.3 in July, the highest reading in five months
  • New orders (seasonally adjusted) contracted in July for the 38th consecutive month
  • Employment continued to contract, but at a slower rate, up 5.9 points to 46.2 in July
  • There were encouraging reports from house builders indicating an improvement in customer enquiries and a pick-up in new work in July