According to the latest Australian Performance of Construction Index (PCI) released by the Australian Industry Group (Ai Group) and the Housing Industry Association, last month’s expansion was driven by strong apartment building activity, which in October rose at the fastest rate recorded in the past 10 years.
The overall PCI increased slightly to 52.1 points. Index readings above 50 points indicate an expansion in activity, with the distance from 50 indicative of the strength of the expansion.
Apartment building rose to 72.4 points while house building fell to 47 points – the first time in five months that the sub-sector has contracted. Engineering and commercial construction both remained in a state of contraction at 44.1 points and 49 points, respectively.
Optimistic outlook
The PCI results followed the release of the Construction Outlook at the end of October. The survey – which is undertaken twice a year by Ai Group in conjunction with the Australian Constructors Association – stated that after an anticipated fall of 2.4 per cent in the 2015–16 financial year, the overall value of construction work was expected to increase 4.7 per cent in 2016–17.
The report forecast that multi-level apartment development would increase 13.7 per cent in 2015–16, then a further 8.1 per cent in 2016–17, and that commercial construction would also gradually recover, rising 2.3 per cent in 2015–16 before improving a further 4.3 per cent in 2016–17.
While engineering construction was expected to fall by 5.2 per cent in 2015–16, the report said 2016–17 would likely see a boost in revenue from infrastructure work.
“The lift anticipated for engineering construction in 2016–17 is despite expectations of further contraction in mining and resource projects and is driven by strong expectations for a pick-up of transport and communications projects,” Ai Group chief executive Innes Willox commented.
“With commercial construction anticipated to lift in 2015–16 and 2016–17 and with the apartment building boom expected to continue, the outlook is for the most balanced pattern of growth for many years.”
Infrastructure support
State governments have started responding to the anticipated increase in project activity, and several initiatives designed to facilitate the smooth, effective delivery of infrastructure were recently announced.
At the end of October, the Queensland Government released a draft State Infrastructure Plan, which outlined a new strategic direction for the planning, investment and delivery of Queensland’s infrastructure.
It was said the draft was designed to provide confidence and certainty to business, while also giving the private sector the opportunity to develop innovative infrastructure solutions through market-led proposals.
Shortly after, the Queensland Government established a board of eight experts from the private and public sectors called Building Queensland. The board will provide the state government with independent advice on infrastructure priorities, assist in evaluating market-led infrastructure project proposals, and inform the development of future projects in the State Infrastructure Plan.
The New South Wales Government also recently established Projects NSW, a specialist unit within Infrastructure NSW that will mange the procurement and delivery of the state’s infrastructure priorities.
As previously reported by Quarry, the Victorian Government established its own state infrastructure body, Infrastructure Victoria, in September this year.
More information
Australian PCI October 2015 report
Construction Outlook October 2015 report
Queensland draft State Infrastructure Plan
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