Plant & Equipment

Decline in construction performance steepens

The Australian Performance of Construction Index (PCI) decreased two points to 43.9 in February, indicating a higher rate of contraction than in January. This was believed to be due to a reduced number of new contracts and project completions in 2015, particularly within the engineering and commercial construction subsectors.

Engineering construction activity fell by two points to 42.7, its weakest reading in nine months, which was said to be reflective of a diminishing pipeline of resource-related construction projects. Commercial building activity also dropped 7.2 points to 41.8, and a lack of public sector tenders and “soft” private sector investment were cited as inhibiting activity in both subsectors.

Conversely, apartment building recorded its strongest reading since November 2014, with activity rising 10.8 points to 53.1 – the only subsector to return to a state of growth.

Although house building continued to contract for the third consecutive month, it was at a slower rate, with its reading increasing 4.5 points to 45.4.

“While house building is retreating from relatively healthy levels, it is no longer offsetting the well-entrenched decline in mining-related engineering construction activity,” Australian Industry Group’s (Ai Group’s) director for public policy, Peter Burn, commented. “The near-term outlook for the sector is for continuing declines in activity, as suggested by the low level of new orders revealed by survey respondents.”

The Australian PCI is a seasonally adjusted national composite index jointly issued by the Ai Group and the Housing Industry Association. Readings below 50 indicate a contraction in activity, with the distance from 50 indicating the rate of the contraction. The monthly report is based on the diffusion indexes for activity, orders/new business, deliveries and employment with varying weights.

The full Australian PCI report for February 2015 is available at

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