Australian Construction Industry Contracted in November

According to a report by the Australian Industry Group and Housing Industry Association, an index measuring construction fell 4.4 points to 32 from October, which is released in Sydney today. A reading less than 50 points shows construction shrank.

Central bank Governor Glenn Stevens has cut the benchmark interest rate this week by one percentage point to a six-year low of 4.25 percent since the property market is shrinking. Building approvals declined in October to the lowest level since 2001 and house prices dropped by the most in the third quarter since 1978.

Tony Pensabene, an associate director of economics at the Australian Industry Group, said that there had been a further deterioration in house and apartment construction as tight credit conditions and deteriorating economic sentiment continued to hit demand for building projects. He added, "Activity in engineering and commercial construction also weakened in November, while new orders for the industry as a whole are now at their lowest level in 38 months since the survey began."

A gauge of house construction fell 2.6 points to 20.3 from 22.9 in October, which is showed in the today's report. Commercial building declined 4.5points to 45.9 from 50.4.