Construction workers build scaffolding at the site of a new apartment tower in Sydney
Construction workers build scaffolding at the site of a new apartment tower in Sydney November 30, 2012. Reuters/Tim Wimborne

A boom in the resdential housing sector is helping the Australian construction industry to brave the symptoms of a slowdown. Unlike the slump in the engineering segment, the boom in apartment and house construction is helping the industry offset the pressure from the sharp downturn in mining-related projects.

The Australian Industry Group and Housing Industry Association's Performance of Construction Index for September was slightly down at 51.9 – compared to August, even though it was above the key 50-point level to indicate an expansion. House building rose 2.4 points to 56.8 and announced a solid expansion, ABC news reported.

Apartment construction registered stronger growth, with a 4.5-point increase to 63.2 and asserted a unit-building boom. For builders, the problems are rising labour and building material costs as demand spurted and the lower dollar value impacted import prices.

Silver lining

Peter Burn, Ai Group’s head of public policy, noted that strong residential building activity was the silver lining that helped the construction sector to stay afloat in September.

In engineering work, new orders for September showed a decline, marking the slump in mining-related construction while new orders for house, apartment and commercial building had a visible jump, he said.

Affected segments

The fall of the index in September, compared to August was the result of a 9.3-point crash in engineering category, dominated by resources projects. It fell to 36.6 and indicated a sharp contraction. Commercial construction too fell 6.5 points in August and became slightly negative at 48.1 in September.

“Residential construction activity remains the cornerstone of the broader construction industry and retain this role in at least the first half of 2016,” noted HIA economist Diwa Hopkins.

Tasmania tops

Meanwhile, Tasmania emerged as the nation’s leading state in economic performance in civil and commercial building sectors. According to the latest Construction Monitor report, which ranked the current economic performance of various states and sectors in a range of building activities, Tasmania is the topper, followed by Victoria, the Northern Territory and New South Wales.

Tasmania performed well in activities relating to telecommunications, roads and highways. It also scored highly in terms of commercial buildings, bridges, railways and harbours, mining, heavy industry, water supply, storage and drainage.

Victoria was ahead in industrial buildings and non-residential buildings. The Northern Territory impressed with its expanding work on commercial buildings, power generation, transmission, heavy industry and telecommunications.

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