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Housing slump hits construction industry
The Australian construction industry remains in a subdued state with a leading indicator showing the sector contracted in May for the second month in a row.
The Australian Industry Group-Housing Industry Association performance of construction index fell 2.8 points in May to 45.1, to be 4.9 points below the base level of 50 that separates expansion from contraction.
The fall in activity was underpinned largely by a slump in the residential housing sector, the Australian Industry Group (Ai Group) said, with a marked reduction in the number of houses being built after a short-lived recovery in April.
After expanding in April for the first time in seven months, the housing segment contracted with the housing sub-index falling by 11.8 points to 39.2.
Builders also reported that low housing affordability was having a major impact in constraining demand.
A fall in the number of commercial and infrastructure related projects, and continued weakness in apartment building activity also impacted negatively on total construction activity.
Apartment building activity, although steady, remained the most subdued segment in May with the sub-index at 35.3 points.
While weaker activity across the construction sector and lower levels of new business led to a marginal fall in employment in May, with the employment sub-index at 48.8, the figure was 1.4 points higher than the previous reading, suggesting the rate of employment decline was easing.
Ai Group associate director of economics and research Tony Pensabene said the index results confirmed the Australian construction market was in a subdued state.
Mr Pensabene said a recovery in the housing market was yet to emerge and the apartment segment remained stagnant, but that the situation was more positive elsewhere in the industry.
"Despite slight activity falls in engineering and commercial construction, both remain the strongest performing sectors and have, up to this point, enjoyed a long period of almost consistently strong growth," he said.
The performance of construction index is a seasonally adjusted national composite index based on the diffusion of indices for sales, orders and new business, deliveries and employment with varying weights across the residential, engineering, non-residential and apartment segments.
The separation from 50 is indicative of the strength of expansion or decline.
THE AGE.
1 comment:
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