The Australian PCI has continued its road to recovery with the second consecutive month of improved conditions for the construction sector.
The Australian PCI has continued its road to recovery with the second consecutive month of improved conditions for the construction sector.
The house building, engineering and commercial sectors of the Australian Industry Group (Ai Group) and Housing Industry Association’s (HIA) Australian Performance Construction Index (PCI) all saw strong recoveries with the apartment sector still in contraction (40.9).
HIA economist Angela Lillicrap said apartment building will not see a bounceback until overseas migration returns.
“The apartment building activity index continues to show that the market is contracting,” she said.
“The shift in population away from metropolitan Sydney and Melbourne is expected to continue until the return of overseas migration.”
The PCI index for November was positive (55.3), marking a 2.6-point rise and the strongest result since April 2018.
House building activity rose by 5.7 points to 67, and recorded strong results across all states.
Commercial building increased by 13.3 points from October, reaching 52.8.
New orders grew by 3.8 points to 51.7 in November and new orders for house building reached a solid 68.1 points.
Ai Group head of policy Peter Burn said the construction sector has grown strongly in both activity and employment.
“The Australian construction sector grew more strongly in November with both activity and employment decisively stronger in the month,” he said.
“House building was the cornerstone of the lift in performance with support from commercial and engineering construction.
“Apartment building remains in the contractionary state it has been in for more than two years and, with question marks over population growth and falling new orders, this sector is the major dampener on the otherwise encouraging outlook for the broader construction sector.”
According to Burn, engineering construction will have new orders materialise from a lift in house building and commercial construction orders.
“Looking to the months ahead, new orders for house building and commercial construction lifted promisingly while new infrastructure plans are yet to translate into a growing pipeline of new orders for engineering construction,” Burn said.
“In part due to fiscal and monetary policy support, the construction sector is looking ready to play a major role in consolidating the general economic recovery into 2021.”