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Apartment construction subdued

The construction sector contracted again in June - its 25 consecutive month of contraction - according to the Australian Industry Group’s most recent Performance of Construction Index (PCI).

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The index registered 34.8 in June, just 0.1 points above the reading in May.

This latest result was again below the critical 50 point level, which separates expansion from contraction.

Apartment construction was a principal source of weakness, with activity contracting at the steepest rate in 10 months. Subdued conditions in commercial construction and house building continued, although the rate of decline slowed in both sectors.

The weak state of the industry has been attributed to poor demand and low consumer confidence, tight credit conditions, project delays and uncertainty about the economic outlook, according to the report.

This is the sharpest contraction recorded in overall industry activity since February 2009, the AIG added.

House building activity continued to contract in the month and activity levels remain exceedingly weak. More positively, however, the sector’s sub-index rose by 2.5 points to register 30.7, signalling a slower pace of decline, the AIG said.

The PCI dampened the somewhat positive outlook recent Australian Bureau of Statistics (ABS) data provided last week, which showed a 24.8 per cent on-month jump in building approvals during May.

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