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Construction industry experiences steep fall in housing activity
Wednesday, 7 Sep 2016 11:08:40 | Thuy Ong
New homes await completion in a housing sub-division in north-west Sydney July 7, 2006. (Will Burgess: Reuters)
The construction industry experienced a downturn in August, with new figures showing a steep fall in housing activity that was only partially offset by growth in apartment building, commercial construction and engineering construction.
The Australian Industry Group - Housing Industry Association Performance of Construction Index fell 5 points to 46.6.
A reading below 50 indicates a contraction in activity, with the distance from 50 indicating the strength of decrease.
"Very weak conditions in the house building sub-sector overshadowed the positive news for apartment building, commercial construction and engineering construction in August, and pulled the broader construction industry down for the month," said Peter Burn, head of policy at Ai Group.
"While mining-related work continues to wind down, in August, this trend was offset by a lift in other engineering construction work - including in rail and road infrastructure."
The report found house building activity contracted sharply in the month, after three months of growth, with the sub-index falling 13.8 points to 41.1.
On the other hand, apartment building rose 8.8 points to 56.8 points, returning to expansion.
"We're at the peak of the residential construction cycle, but the [index] suggests there is not enough non-residential activity coming along behind," said HIA chief economist Dr Harley Dale.
"When new home construction inevitably peaks by 2016/17, people will look to a plan for further growth.
"Right now there seems to be nothing, because housing is the convenient bedrock and nobody has the vision to look beyond the short term."
Commercial construction edged higher by 1.4 points to 53.2, while engineering construction gained 6.9 points to 55.5.
Growth in the wages sub-index grew 3.6 points to 66.4.
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