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Australian PCI shows slow and steady growth

Australian PCI and ABS building industry output


Construction growth has been maintained in May, albeit at a slower rate, according to the Australia Performance of Construction Index (PCI), compiled by the Ai Group and HIA.

With a score of 58.3 (seasonally adjusted), where scores over 50 indicate growth, the construction industry dropped 0.8 points on its score for April – still coming down off record highs in March.

Overall activity dropped 7.1 points to 55.7 – again, still indicating growth – while engineering construction was the only growing segment for May.

The decline in growth levels was not a worry to Ai group head of policy Peter Burn who said the sector had maintained its position as imperative to Australia’s economic recovery.

“The national construction sector continued to lead Australia’s rebound in May with a further expansion of activity led by the house building and engineering construction sectors,” Burn said. “Commercial construction and apartment building also grew although at more moderate levels.”

In even more positive news, Burn revealed that the employment rate across the sector was the highest recorded in the 16-year history of the Australian PCI.

However, apartment construction activity has almost dropped into decline, at a score of 50.5, with commercial activity not far ahead at 51.2.

According to results from the Australian Bureau of Statistics (ABS), the number of approvals for dwellings in April fell by 8.6 per cent, after the 18.9 HomeBuilder-inspired spike in March.

ABS director of construction statistics Daniel Rossi said detached housing was becoming more of a trend, as populations continue to decentralise away from urban areas.

“While there was a fall in overall approvals, the April result highlights the continued strong demand for detached housing, with private sector house approvals reaching a new record high in April, up 4.6 per cent,” Rossi said.

Despite the deadline for HomeBuilder approvals being well past, an extension to project commencement deadlines has ensured growth rates remain higher for longer, according to HIA economist Tom Devitt.

“The volume of work on the ground continued to increase in May,” Devitt said. “The extension of the HomeBuilder commencement deadlines will see new house building levels remaining elevated for longer.

“This elevated level of demand is putting pressure on the supply of trades and materials. It also occurred at the same time as a surge in international demand for shipping and raw materials, including timber.

“This will continue to challenge house building until the market slows toward the end of this year.”


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