The Australian Industry Group Australian Performance of Construction Index reported by the Housing Industry Association was 4.9 points stronger in November at 39.6, although it was still well below the 50 point level separating expansion from contraction. November marked the 18th straight month the national construction industry index has been in the red.

While new orders were still contracting in November with the sub-index measuring 38.6, this was an improvement of 6.7 points on the previous month. Activity across the industry remains subdued although the recent interest rate decision was reflected in the 5.3 point lift in house building activity (38.6). The pace of decline also eased for engineering construction (45.6) with more work flowing from resource-based projects. In contrast, apartment building (23.4) and commercial construction (28.3) contracted at a faster rate in the month.

Australian Industry Group Director Public Policy Peter Burn said: "The construction sector remains very uneven with the residential and commercial construction sub-sectors considerably weaker relative to the resources-project linked engineering construction sub-sector. Commercial construction continues to contract and businesses completing projects related to the fiscal stimulus package are not finding sufficient private sector work to keep fully occupied. While still far from satisfactory, the sector overall appears to be pulling back from the accelerating pace of decline reached in August and September."

Housing Industry Association Senior Economist Andrew Harvey said: "This month's Australian PCI report again highlights the current fragile state of residential building with activity continuing to contract and looking a long way from an eventual return to growth. There's no hiding from the fact that house-building activity has contracted for 18 straight months and apartment building activity has now contracted for 19 straight months. When you consider this long-lived decline in residential building activity alongside recent dismal building approvals it is clear that the federal government needs to urgently turn its attention to stimulating new home building in this country."

Australian PCI Key Findings for November:

  • The Australian Industry Group Australian Performance of Construction Index (Australian PCI) in conjunction with the Housing Industry Association contracted, albeit at a slower rate, in November with the seasonally adjusted index up 4.9 points to 39.6 (readings below 50 indicate a contraction in activity).
  • November marked the 18th straight month the national construction industry has spent in the red.
  • All four major sub-sectors remained in negative territory: house building (38.6), engineering construction (45.6), apartment building (23.4) and commercial construction (28.3).
  • The weakness in commercial construction was largely seen as a result of dwindling fiscal stimulus projects and a lack of private investment.
  • The new orders sub-index was 6.7 points stronger at 38.6.
  • Employment was 41.9 in November while wages growth was unchanged.
  • Amid highly competitive market conditions, selling prices continued to decline, registering 38.3 in the month.